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Community development venture capital: concept and status quo in Germany

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  • Achleitner, Ann-Kristin
  • Braun, Reiner
  • Bender, Marko
  • Geidner, Annabell
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    Abstract

    As most other countries, Germany also faces dramatic regional differences in terms of socioeconomic development. One important driver of such development is the existence of a healthy entrepreneurial activity and the creation of new companies. We argue that venture capital (VC) and especially community development venture capital (CDVC) can be a powerful instrument to stimulate entrepreneurship and to support the growth of ambitious companies. Hence, the present paper deals with the general questions, whether there are regional gaps in the supply of VC in Germany? Whether these regional gaps do geographically correspond to the most deprived areas in Germany, and which kind of VC companies are currently in place in order to close potential regional gaps? Geographically, we find that the north-eastern part of Germany is far more deprived than the rest of the country, but is relatively well supplied with VC. Nevertheless, the primary potential target area for CDVC activities in the country is the federal state of Brandenburg in this area. Our assessment of German players in the VC market reveals that some public VC companies do investments similar to CDVC. However, these companies do not offer real hands-on support for entrepreneurs, and real CDVC engagement in the country is yet to come. --

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    Bibliographic Info

    Paper provided by Center for Entrepreneurial and Financial Studies (CEFS), Technische Universität München in its series CEFS Working Paper Series with number 2008-03.

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    Date of creation: 2008
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    Handle: RePEc:zbw:cefswp:200803

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    Related research

    Keywords: regional development; community development venture capital; regional equity gap;

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    1. Lerner, Josh, 1995. " Venture Capitalists and the Oversight of Private Firms," Journal of Finance, American Finance Association, vol. 50(1), pages 301-18, March.
    2. Da Rin, Marco & Nicodano, Giovanna & Sembenelli, Alessandro, 2005. "Public policy and the creation of active venture capital markets," Working Paper Series 0430, European Central Bank.
    3. Zoltan J. Acs & Catherine Armington, 2004. "Employment Growth and Entrepreneurial Activity in Cities," Papers on Entrepreneurship, Growth and Public Policy 2004-13, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    4. Michael Fritsch, 2007. "Die Arbeitsplatzeffekte von Gründungen - Ein Überblick über den Stand der Forschung," Jena Research Papers in Business and Economics - Working and Discussion Papers 25/2007, Friedrich-Schiller-University Jena, School of Economics and Business Administration.
    5. Ron Martin & Christian Berndt & Britta Klagge & Peter Sunley, 2005. "Spatial proximity effects and regional equity gaps in the venture capital market: evidence from Germany and the United Kingdom," Environment and Planning A, Pion Ltd, London, vol. 37(7), pages 1207-1231, July.
    6. Andrea Schertler, 2001. "Venture Capital in Europe's Common Market: A Quantitative Description," Kiel Working Papers 1087, Kiel Institute for the World Economy.
    7. Fritsch, Michael & Schilder, Dirk, 2006. "Is venture capital a regional business? The role of syndication," Freiberg Working Papers 2006,09, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
    8. Fritsch, Michael & Weyh, Antje, 2004. "How large are the direct employment effects of new businesses? An empirical investigation," Freiberg Working Papers 2004,05, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
    9. Fritsch, Michael & Schilder, Dirk, 2006. "Does venture capital investment really require spatial proximity? An empirical investigation," Freiberg Working Papers 2006,07, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
    10. 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.
    11. Walter Powell & Kenneth Koput & James Bowie & Laurel Smith-Doerr, 2002. "The Spatial Clustering of Science and Capital: Accounting for Biotech Firm-Venture Capital Relationships," Regional Studies, Taylor & Francis Journals, vol. 36(3), pages 291-305.
    12. Gordon Murray, 1998. "A Policy Response to Regional Disparities in the Supply of Risk Capital to New Technology-based Firms in the European Union: The European Seed Capital Fund Scheme," Regional Studies, Taylor & Francis Journals, vol. 32(5), pages 405-419.
    13. Jeng, Leslie A. & Wells, Philippe C., 2000. "The determinants of venture capital funding: evidence across countries," Journal of Corporate Finance, Elsevier, vol. 6(3), pages 241-289, September.
    14. Rebecca Harding, 2000. "Venture capital and regional development: Towards a venture capital 'system'," Venture Capital, Taylor & Francis Journals, vol. 2(4), pages 287-311, October.
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