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The European Venture Capital and Private Equity country attractiveness indices

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  • Groh, Alexander Peter
  • von Liechtenstein, Heinrich
  • Lieser, Karsten

Abstract

We calculate composite indices to compare the attractiveness of 27 European countries for institutional investments into the Venture Capital and Private Equity asset class. To achieve this we use 42 different parameters, and propose an aggregation structure that allows for benchmarking on more granulated levels. The United Kingdom leads our ranking, followed by Ireland, Denmark, Sweden, and Norway. While Germany is slightly above the average European attractiveness level, the scores are rather disappointing for France, Italy, Spain, and Greece. Our analyses reveal that while the UK is similar to the other European countries with respect to many criteria, there are two major differences, which ultimately affect its attractiveness: its investor protection and corporate governance rules, and the size and liquidity of its capital market. The state of the capital market is likewise a proxy for the professionalism of the financial community, for deal flow and exit opportunities. We determine a reasonable correlation between our attractiveness index scores and actual Venture Capital and Private Equity fundraising activities and prove the robustness of our calculations. Our findings across all the European countries suggest that, while investor protection and capital markets are in fact very important determinants for attractiveness, there are numerous other criteria to consider.

Suggested Citation

  • Groh, Alexander Peter & von Liechtenstein, Heinrich & Lieser, Karsten, 2010. "The European Venture Capital and Private Equity country attractiveness indices," Journal of Corporate Finance, Elsevier, vol. 16(2), pages 205-224, April.
  • Handle: RePEc:eee:corfin:v:16:y:2010:i:2:p:205-224
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    3. Daniel Hain & Sofia Johan & Daojuan Wang, 2016. "Determinants of Cross-Border Venture Capital Investments in Emerging and Developed Economies: The Effects of Relational and Institutional Trust," Journal of Business Ethics, Springer, pages 743-764.
    4. Engberg, Erik & Halvarsson, Daniel & Tingvall, Patrik, 2017. "Direct and Indirect Effects of Private- and Government Sponsored Venture Capital," Ratio Working Papers 288, The Ratio Institute.
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    7. Douglas Cumming & Sofia Johan, 2016. "Venture’s economic impact in Australia," The Journal of Technology Transfer, Springer, vol. 41(1), pages 25-59, February.
    8. Cao, Jerry X. & Cumming, Douglas & Qian, Meijun & Wang, Xiaoming, 2015. "Cross-border LBOs," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 69-80.
    9. Elisabete Félix & Cesaltina Pires & Mohamed Gulamhussen, 2013. "The Determinants of Venture Capital in Europe — Evidence Across Countries," Journal of Financial Services Research, Springer;Western Finance Association, pages 259-279.
    10. Musibau Akintunde Ajagbe & Joshua Olusola Olujobi & Anthony Akwawa Uduimoh & Lawrence Uchenna Okoye & Adunola Oluremi Oke, 2016. "Technology Based Entrepreneurship Financing. Lessons for Nigeria," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(1), pages 150-163, January.
    11. A. Heughebaert & T. Vanacker & S. Manigart, 2012. "Institutional Frameworks, Venture Capital and the Financing of European New Technology-Based Firms," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/809, Ghent University, Faculty of Economics and Business Administration.
    12. Nathan Mauck & S. McKay Price, 2017. "Determinants of Foreign Versus Domestic Real Estate Investment: Property Level Evidence from Listed Real Estate Investment Firms," The Journal of Real Estate Finance and Economics, Springer, vol. 54(1), pages 17-57, January.
    13. Achleitner, Ann-Kristin & Engel, Nico & Reiner, Uwe, 2013. "The performance of venture capital investments: Do investors overreact?," Review of Financial Economics, Elsevier, pages 20-35.
    14. Karsten Lieser & Alexander Groh, 2014. "The Determinants of International Commercial Real Estate Investment," The Journal of Real Estate Finance and Economics, Springer, vol. 48(4), pages 611-659, May.
    15. Cumming, Douglas, 2014. "Public economics gone wild: Lessons from venture capital," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 251-260.
    16. Cumming, Douglas & Helge Haß, Lars & Schweizer, Denis, 2013. "Private equity benchmarks and portfolio optimization," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3515-3528.
    17. Klaus S. Friesenbichler & Thomas Url, 2013. "Location Factors and Investment Potential of Risk Capital in Austria," WIFO Monatsberichte (monthly reports), WIFO, pages 673-683.
    18. Lieser, Karsten & Groh, Alexander P., 2011. "The determinants of international commercial real estate investments," IESE Research Papers D/935, IESE Business School.
    19. Cumming, Douglas J. & Grilli, Luca & Murtinu, Samuele, 2017. "Governmental and independent venture capital investments in Europe: A firm-level performance analysis," Journal of Corporate Finance, Elsevier, pages 439-459.
    20. Elisabete Gomes Santana Felix & Cesaltina Pires & Mohamed Azzim Gulamhussenb, 2007. "The Determinants of Venture Capital in Europe - Evidence Across Countries," CEFAGE-UE Working Papers 2007_01, University of Evora, CEFAGE-UE (Portugal).
    21. Bertoni, Fabio & Tykvová, Tereza, 2015. "Does governmental venture capital spur invention and innovation? Evidence from young European biotech companies," Research Policy, Elsevier, pages 925-935.
    22. Wilson, Nick & Wright, Mike & Siegel, Donald S. & Scholes, Louise, 2012. "Private equity portfolio company performance during the global recession," Journal of Corporate Finance, Elsevier, pages 193-205.
    23. Håkanson, Lars & Ambos, Björn & Schuster, Anja & Leicht-Deobald, Ulrich, 2016. "The psychology of psychic distance: Antecedents of asymmetric perceptions," Journal of World Business, Elsevier, pages 308-318.

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