The Regional Supply of Venture Capital - Can Syndication overcome Bottlenecks?
AbstractWe investigate whether the supply of venture capital (VC) is driven by spatial proximity between a VC company and the portfolio firm. Our analysis is based on information about VC investments in Germany between 2004 and 2009. We find that possible problems caused by the geographic distance to a portfolio firm seem to be overcome by syndication of investments with one of the VC firms located close to the investment. Our analysis does, however, suggest that short geographic distance between an investor and the investment has an increasing effeon the probability for syndication as well as on the number of firms that join the syndicate. Hence, local VC suppliers may assume a role of an 'anchor' connecting the regional economy to more distant parts of the industry.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2010-069.
Date of creation: 05 Oct 2010
Date of revision:
Venture Capital; syndication; geographic proximity; start-up financing; equity gap;
Other versions of this item:
- Michael Fritsch & Dirk Schilder, 2012. "The Regional Supply of Venture Capital: Can Syndication Overcome Bottlenecks?," Economic Geography, Clark University, vol. 88(1), pages 59-76, 01.
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-16 (All new papers)
- NEP-ENT-2010-10-16 (Entrepreneurship)
- NEP-GEO-2010-10-16 (Economic Geography)
- NEP-URE-2010-10-16 (Urban & Real Estate Economics)
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