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Nothing Ventured - Nothing Gained? Empirical Evidence on Venture Capital Financing in Switzerland

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  • Christian Hopp

Abstract

This paper analyses the Determinants of Venture Capital Staging and Syndication in Switzerland. I find that among the different affiliations of VC investors in Switzerland especially independent investors make more extensive use of staged capital infusions. Moreover, the results suggest that staging is employed as a tool for mitigating risks in VC financing. In addition, I find that Syndication can serve as an entrance strategy for foreign VC providers. Furthermore, I find evidence that firms, which realize the benefit of staging, do also become conscious of the value added in financing Start Ups by involving partners. Consequently, VC firms that make use of staging are also more open to syndication. With respect to the value-added of Co-Investment behavior, I show that syndication positively impacts the success rate of a VC provider, whereas VC firms that are more locally embedded do exhibit lower success rates for their investment portfolio.

Suggested Citation

  • Christian Hopp, 2007. "Nothing Ventured - Nothing Gained? Empirical Evidence on Venture Capital Financing in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 143(III), pages 239-260, September.
    • Handle: RePEc:ses:arsjes:2007-iii-1
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    References listed on IDEAS

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    1. Manigart, Sophie & De Waele, Koen & Wright, Mike & Robbie, Ken & Desbrieres, Philippe & Sapienza, Harry J. & Beekman, Amy, 2002. "Determinants of required return in venture capital investments: a five-country study," Journal of Business Venturing, Elsevier, vol. 17(4), pages 291-312, July.
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    3. James A. Brander & Raphael Amit & Werner Antweiler, 2002. "Venture‐Capital Syndication: Improved Venture Selection vs. The Value‐Added Hypothesis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 423-452, September.
    4. Zsuzsanna Fluck & Kedran Garrison & Stewart C. Myers, 2005. "Venture Capital Contracting and Syndication: An Experiment in Computational Corporate Finance," NBER Working Papers 11624, National Bureau of Economic Research, Inc.
    5. Christian Hopp & Finn Rieder, 2011. "What drives venture capital syndication?," Applied Economics, Taylor & Francis Journals, vol. 43(23), pages 3089-3102.
    6. Gompers, Paul A, 1995. "Optimal Investment, Monitoring, and the Staging of Venture Capital," Journal of Finance, American Finance Association, vol. 50(5), pages 1461-1489, December.
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    Cited by:

    1. Spyros Arvanitis & Tobias Stucki, 2013. "The Impact of Venture Capital on the Persistence of Innovation Activities of Swiss Start-ups," KOF Working papers 13-332, KOF Swiss Economic Institute, ETH Zurich.
    2. Spyros Arvanitis & Tobias Stucki, 2014. "The impact of venture capital on the persistence of innovation activities of start-ups," Small Business Economics, Springer, vol. 42(4), pages 849-870, April.

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    More about this item

    Keywords

    Venture Capital; Entrepreneurship; Syndication;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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