The law and finance of venture capital financing in Europe: findings from the RICAFE research project
AbstractThis survey article summarizes the findings of four research projects on the venture capital industry in Europe and the role played by legal institutions and the legal framework. A study on patent litigation insurance argues that insurance can create a level playing field for small innovators, but that compulsory insurance can only be justified as a transitory scheme. The second study argues that intermediaries from countries with a better legal tradition will provide more governance and value added services, even when investing abroad. It also provides supportive empirical evidence based on an extensive questionnaire-study. The third project investigates the relationship between venture investments and a widely used legality index in 39 countries, finding that better laws facilitate faster deal screening and origination, lead to a higher probability of syndication, and also facilitate board representation of the investors. The final study documents a significant performance gap between the European and the US venture capital industry, but argues that the difference can not be attributed to differences in legal origin.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39552.
Date of creation: Nov 2005
Date of revision:
venture capital; patent litigation; legal system; corporate governance; legality index; performance;
Find related papers by JEL classification:
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
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- Llobet, Gerard & Suarez, Javier, 2005.
"Financing and the Protection of Innovators,"
CEPR Discussion Papers
4944, C.E.P.R. Discussion Papers.
- Laura Bottazzi & Marco Da Rin & Thomas Hellmann, 2005. "What Role of Legal Systems in Financial Intermediation? Theory and Evidence," Working Papers 283, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Reiko Aoki & Jin-Li Hu, 1999. "Licensing vs. Litigation: The Effect of the Legal System on Incentives to Innovate," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(1), pages 133-160, 03.
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