Small Business Economics

, Volume 39, Issue 1, pp 179–205

Financing technology-based small firms in Europe: what do we know?



This paper reviews the evidence on financing technology-based small firms (TBSFs) in Europe. European TBSFs finance new investments by relying primarily on internal funds, due to capital market failures induced by asymmetric information. European venture capital has caught up with US venture capital, but this is mainly because of the growth in UK venture investments. It is unclear whether European venture capital has been able to certify the quality and enhance the growth of funded companies. Compared with the NASDAQ, there is little development of trading in high-tech stocks in Europe: the so-called New Markets established in the 1990s collapsed in the wake of the Internet bubble crash. Public venture capital and research and development (R&D) tax incentives seem to have positively affected high-tech firms.


High-tech Small firms Capital structure Venture capital Stock markets Public policy 

JEL Classifications

G24 G28 G32 M13 L26 


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© Springer Science+Business Media, LLC. 2010

Authors and Affiliations

  1. 1.Universtà di Napoli ParthenopeNapoliItaly

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