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The Reallocation Effects of COVID-19: Evidence from Venture Capital Investments around the World

Author

Listed:
  • Andrea Bellucci

    (European Commission, Joint Research Centre (JRC))

  • Alexander Borisov

    (Carl H. Lindner College of Business, University of Cincinnati)

  • Gianluca Gucciardi

    (European Commission, Joint Research Centre (JRC))

  • Alberto Zazzaro

    (Department of Economics and Statistics, University of Naples Federico II)

Abstract

We examine possible reallocation effects on venture capital (VC) investment due to the spread of COVID-19 around the globe. Exploiting the staggered nature of the pandemic and transactionlevel data, we empirically document a shift of venture capital towards deals in pandemic-related categories. A difference-in-differences analysis estimates significant increases in invested amount and number of deals in such categories. We further highlight several heterogenous effects related to the experience of VC investors, their organizational form, and country of origin. Our results underscore the link between the spread of the pandemic and the functioning of the VC market around the world.

Suggested Citation

  • Andrea Bellucci & Alexander Borisov & Gianluca Gucciardi & Alberto Zazzaro, 2020. "The Reallocation Effects of COVID-19: Evidence from Venture Capital Investments around the World," Mo.Fi.R. Working Papers 167, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  • Handle: RePEc:anc:wmofir:167
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    More about this item

    Keywords

    Venture Capital; Investment; COVID-19; Healthcare; Pandemic;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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