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Informed Capital in a Hostile Environment: The Case of Relational Investors in Germany

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  • Dorothea Schäfer
  • Dirk Schilder

Abstract

Informed capital is a crucial ingredient to a well-functioning market for start-up finance, especially in times of difficult market conditions. For bank-based systems, the question regarding which investors actually supply informed capital has not yet been answered. To fill this gap, we conduct a survey among German suppliers of start-up finance. We find significant differences between the investors which are linked to banks and those financiers which are not. Although, the bankrelated group, including public equity suppliers, delivers some sort of informed capital, venture capital companies and Business Angels are the key providers of informed capital in the German market for start-up finance.

Suggested Citation

  • Dorothea Schäfer & Dirk Schilder, 2006. "Informed Capital in a Hostile Environment: The Case of Relational Investors in Germany," Discussion Papers of DIW Berlin 549, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp549
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    Cited by:

    1. Michael Fritsch & Dirk Schilder, 2008. "Does Venture Capital Investment Really Require Spatial Proximity? An Empirical Investigation," Environment and Planning A, , vol. 40(9), pages 2114-2131, September.
    2. Luukkonen, Terttu, 2007. "Understanding Strategies of the Venture Capital Investors in Helping Their Portfolio Firms to Become International," Discussion Papers 1099, The Research Institute of the Finnish Economy.
    3. Doris Neuberger, 2009. "Finanzierungs- und Governance-Strukturen im Wandel: Arbeitsteilung zwischen Banken und Private Equity Fonds," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(1), pages 143-155.
    4. Luukkonen, Terttu & Maunula, Mari, 2007. "Non-financial Value-added of Venture Capital: A Comparative Study of Different Venture Capital Investors," Discussion Papers 1067, The Research Institute of the Finnish Economy.
    5. Terttu Luukkonen, & Mari Maunula,, 2006. "Coaching Small Biotech Companies into Success: The Value-adding Function of VC," Discussion Papers 1032, The Research Institute of the Finnish Economy.
    6. Schilder, Dirk, 2006. "Public venture capital in Germany: task force or forced task?," Freiberg Working Papers 2006/12, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
    7. Luukkonen, Terttu & Deschryvere, Matthias & Bertoni, Fabio & Nikulainen, Tuomo, 2011. "Importance of the Non-financial Value Added of Government and Independent Venture Capitalists," Discussion Papers 1257, The Research Institute of the Finnish Economy.
    8. Luukkonen, Terttu, 2008. "Different Types of Venture Capital Investors and Value-added to High-Tech Portfolio Firms," Discussion Papers 1149, The Research Institute of the Finnish Economy.

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    More about this item

    Keywords

    Informed capital; Start-up financing; Venture capital; Banks; Information;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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