Return Expectations from Venture Capital Deals in Europe: A Comparative Study

The present comparative study is based on a survey conducted among the venture capital professionals of three major European countries, namely Germany, France, and the United Kingdom. It contributes to ongoing research on venture capital practices by linking theories on return expectations and perception biases to the European venture capital context. Confirming prior empirical findings, our results highlight the important overconfidence biases prevalent in European venture capital, with almost 70 % of the respondents expecting their fund to do better than the average fund during the best venture capital vintage period to date. Whilst this study does not determine whether the underlying causes of such biases differ from a country to another, it does show that unlike one might expect, cross-country differences in the venture capitalists’ perception biases are surprisingly negligible. Whether this finding suggests that venture capital policies should be coordinated, if not conducted, at a European level remains to be clarified however, for the causes for such biases remain unclear and may vary from a country to another.