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Invest Local or Remote? The Effects of COVID-19 Lockdowns on Venture Capital Investment Around the World

Author

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  • Pengfei Han

    (Guanghua School of Management, Peking University, Beijing 100871, China)

  • Chunrui Liu

    (Business School, University of International Business and Economics, Beijing 100029, China)

  • Xuan Tian

    (PBC School of Finance, Tsinghua University, Beijing 100083, China)

  • Kexin Wang

    (School of Finance, Renmin University of China, Beijing 100872, China)

Abstract

We find the “death of distance” in venture capital (VC) investment caused by the COVID-19 pandemic: VCs invest in more distant startups during the COVID-19 lockdowns, and such effects continue after the economy reopens. The death of distance is more pronounced when there is better internet infrastructure, lower information asymmetry between VCs and entrepreneurs, and smaller deal size. The pandemic-spurred advancement and adoption of remote communication technology contribute to the documented observations. The death of distance in VC investment implies more vibrant entry of outside VCs into geographically localized markets, intensified competition among VCs, and mitigated regional inequality of entrepreneurial access to VC financing.

Suggested Citation

  • Pengfei Han & Chunrui Liu & Xuan Tian & Kexin Wang, 2026. "Invest Local or Remote? The Effects of COVID-19 Lockdowns on Venture Capital Investment Around the World," Management Science, INFORMS, vol. 72(4), pages 3351-3370, April.
    • Handle: RePEc:inm:ormnsc:v:72:y:2026:i:4:p:3351-3370
    DOI: 10.1287/mnsc.2024.04374
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