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Does venture capital investment really require spatial proximity? An empirical investigation

  • Michael Fritsch
  • Dirk Schilder

We examine the role of spatial proximity for venture capital (VC) investments in Germany. The main database is a survey of seventy-five personal interviews with representatives of different types of financial institutions. The analysis shows that spatial proximity is much less important for VC investments than is often believed. The results indicate that telecommunication cannot be regarded as a means of overcoming the problems of geographical distance. We find that VC suppliers frequently syndicate investments in distant portfolio firms with partners who are more closely located. The age of the portfolio firm does not affect the importance of spatial proximity. On the whole, regional proximity is not a dominant factor in VC partnerships.

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Article provided by Pion Ltd, London in its journal Environment and Planning A.

Volume (Year): 40 (2008)
Issue (Month): 9 (September)
Pages: 2114-2131

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Handle: RePEc:pio:envira:v:40:y:2008:i:9:p:2114-2131
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  17. Slavtchev, Viktor & Fritsch, Michael, 2005. "The Role of Regional Knowledge Sources for Innovation: An Empirical Assessment," Freiberg Working Papers 2005,15, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
  18. Alan Doran & Graham Bannock, 2000. "Publicly sponsored regional venture capital: what can the UK learn from the US experience?," Venture Capital, Taylor & Francis Journals, vol. 2(4), pages 255-285, October.
  19. Sapienza, Harry J. & Manigart, Sophie & Vermeir, Wim, 1996. "Venture capitalist governance and value added in four countries," Journal of Business Venturing, Elsevier, vol. 11(6), pages 439-469, November.
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