The internationalization of venture capital

The internationalization of venture capital Purpose – The purpose of this paper is to investigate the factors which affect the market for international venture capital (VC) investments, relying on comprehensive deal‐level data sources, covering three decades and about 100 countries. Design/methodology/approach – A gravity analysis indicates that distance, common language, and colonial ties may have been significant factors in directing these flows. Findings – The paper documents major shifts in the nature of international flows. The presence of high‐end human capital, a better business environment, military expenditure, and deeper financial markets are important local factors that appear to attract international VC. There is some evidence indicating network effects and/or fixed costs of entry may be at work. France, Israel, Canada, India and China were consistent net importers of VC deals, with China emerging as the largest net importer of VC. Originality/value – The paper investigates the increasing internationalization of VC investments in recent years and assesses the factors which determine the destination of cross‐border VC investment flows. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Studies Emerald Publishing

The internationalization of venture capital

Journal of Economic Studies, Volume 39 (5): 24 – Sep 21, 2012

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Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
0144-3585
D.O.I.
10.1108/01443581211259446
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to investigate the factors which affect the market for international venture capital (VC) investments, relying on comprehensive deal‐level data sources, covering three decades and about 100 countries. Design/methodology/approach – A gravity analysis indicates that distance, common language, and colonial ties may have been significant factors in directing these flows. Findings – The paper documents major shifts in the nature of international flows. The presence of high‐end human capital, a better business environment, military expenditure, and deeper financial markets are important local factors that appear to attract international VC. There is some evidence indicating network effects and/or fixed costs of entry may be at work. France, Israel, Canada, India and China were consistent net importers of VC deals, with China emerging as the largest net importer of VC. Originality/value – The paper investigates the increasing internationalization of VC investments in recent years and assesses the factors which determine the destination of cross‐border VC investment flows.

Journal

Journal of Economic StudiesEmerald Publishing

Published: Sep 21, 2012

Keywords: Venture capital; Globalization; Gravity equation; Path dependence; Cross border flows

References

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