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Sources of Funds and Investment Strategies of Venture Capital Funds: Evidence from Germany, Israel, Japan and the UK

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  • Mayer, Colin
  • Schoors, Koen
  • Yafeh, Yishay

Abstract

Using a newly constructed data set, we compare sources of funds and investment strategies of venture capital (VC) funds in Germany, Israel, Japan and the UK. Sources of VC funds differ significantly across countries, e.g. banks are particularly important in Germany, corporations in Israel, insurance companies in Japan, and pension funds in the UK. VC investment patterns also differ across countries in terms of the stage and sector of financed companies, as well as in the geographical focus of investments, and these differences are significantly related to the variations in funding sources. However, the influence of particular classes of institutions differs across countries. For example, bank backed VC firms in Germany and Japan are as involved in early stage finance as other funds in these countries, whereas in Israel and the UK they tend to invest in relatively late stage finance. While these financial institutional factors account for some of the differences in investment patterns across countries, other considerations (such as supply of entrepreneurs) are of greater significance.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/13965/1/wp2001-24a.pdf
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Bibliographic Info

Paper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2001-24.

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Length: 33 p.
Date of creation: Sep 2001
Date of revision:
Handle: RePEc:hit:hitcei:2001-24

Note: Preliminary Draft, 9 July 2001, This paper was presented at the conference on Designing Financial Systems in East Asia and Japan: Toward a Twenty-First Century Paradigm. This two-day conference was co-organized by the International Monetary Fund and the CEI. It was held during September 24-25, 2001 at Hitotsubashi Memorial Hall in Tokyo, Japan. A select group of academics, researchers and policy makers from around the world gathered to examine the timely issue of how the financial systems and corporate governance in East Asia and Japan should be redesigned in order to achieve sustainable economic development. The conference included six sessions with 17 papers. All the presented papers were added to the CEI series of working papers. The series, as well as the contents of the conference, can be reached at http://cei.ier.hit-u.ac.jp.
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Keywords: Venture capital; financial institutions; sources of funds;

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Cited by:
  1. Christian Hopp, 2010. "When do venture capitalists collaborate? Evidence on the driving forces of venture capital syndication," Small Business Economics, Springer, vol. 35(4), pages 417-431, November.
  2. Steven N. Kaplan & Frederic Martel & Per Stromberg, 2003. "How Do Legal Differences and Learning Affect Financial Contracts?," NBER Working Papers 10097, National Bureau of Economic Research, Inc.
  3. Andrea Schertler, 2001. "Venture Capital in Europe's Common Market: A Quantitative Description," Kiel Working Papers 1087, Kiel Institute for the World Economy.
  4. Cumming, Douglas J., 2005. "Agency costs, institutions, learning, and taxation in venture capital contracting," Journal of Business Venturing, Elsevier, vol. 20(5), pages 573-622, September.
  5. Cumming, D. & Johan, S.A., 2005. "Is it the law or the lawyers? Investment fund covenants," Discussion Paper 2005-005, Tilburg University, Tilburg Law and Economic Center.
  6. Armin Schwienbacher, 2008. "Venture capital investment practices in Europe and the United States," Financial Markets and Portfolio Management, Springer, vol. 22(3), pages 195-217, September.
  7. Yishay Yafeh, 2003. "An International Perspective of Corporate Groups and Their Prospects," NBER Chapters, in: Structural Impediments to Growth in Japan, pages 259-284 National Bureau of Economic Research, Inc.
  8. Douglas Cumming & Grant Fleming & Armin Schwienbacher, 2008. "Financial intermediaries, ownership structure and the provision of venture capital to SMEs: evidence from Japan," Small Business Economics, Springer, vol. 31(1), pages 59-92, June.

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