Abstract
In this paper we analyse the changes in the patterns of investments for venture capital (VC) investors with different governance structures. We distinguish independent, corporate, bank-affiliated and governmental VC investors. Focusing on a sample of VC investments made in the period 1998–2014 in 28 EU-member countries and Israel, we compute specialization indexes for each investor type along five dimensions (age and industry of target, geographical distance; cross-border and syndicated investments) and compare their evolution across four time periods (booming internet bubble: 1998–2001, bursting post-bubble: 2002–2004, post bubble recovery: 2005–2007, global financial crisis: 2008–2010, and post global financial crisis 2011–2014). We find interesting trends in how investors with different governance structures changed their patterns of investment across time, highlighting the importance of considering the dynamic nature of the VC ecosystem.
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Notes
Macroeconomic conditions during the post-GFC period varies across countries. Northern European countries and Israel experienced a recovery from the crisis, similarly to the U.S. Conversely, in Southern European countries this period was marked by the sovereign debt crisis, peaking in 2011. The few studies that compare the VC industry before and after the global crisis detect several important differences. For example, Block and Sander (2009) formally compare the average investment choices before and after the global crisis in the U.S., finding that in the latter period target companies were older, later stage investments were smaller and done in larger syndicates, while early stage investments were less attractive to CVC. However, because of the different macroeconomic conditions in different countries, whether these results are generalizable is questionable.
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This work was supported by RISIS2—funded by the European Union’s Horizon2020 Research and innovation programme under grant number 824091.
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Bertoni, F., Colombo, M.G., Quas, A. et al. The changing patterns of venture capital investments in Europe. J. Ind. Bus. Econ. 46, 229–250 (2019). https://doi.org/10.1007/s40812-019-00113-1
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DOI: https://doi.org/10.1007/s40812-019-00113-1
Keywords
- Venture capital
- Relative specialization index
- Europe
- Venture capital firm governance
- High-tech start-ups