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Cross-Border Venture Capital Valuation: Business-Cycle, Institutional Factors, and Distance

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  • Max Berre

    (Audencia Business School)

Abstract

Venture capital investment is a key topic-of-interest in trade-investment ecosystems. While several studies explore the venture capital and start-up ecosystem examining valuations, relatively-few studies delve deeper into the role of macro-level economic factors in influencing start-up deals and valuations. Using a dataset of 1,089 venture-capital investments, containing 1,042 unique EU and EEA, this study examines macroeconomic, macro-sectoral, and macro-level institutional influences on the venture capital market landscape in European markets, finding that while local venture-capital market-size drives start-up valuations, as do growth and business cycle conditions, valuation-impacts show evidence of cross-border yield-chasing. Institutional factors meanwhile, impact valuations via both investors' home markets and acquisition-target markets, with investor-country taxes having the stronger valuation impact, whereas selfdealing regulation and non-tariff barriers can also impact startup-valuations. Valuation and venture capital markets driven by investor characteristics, by differences between investor and start-up, and by macro-level differences between the investor's market and the start-up's market.

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  • Max Berre, 2022. "Cross-Border Venture Capital Valuation: Business-Cycle, Institutional Factors, and Distance," Post-Print hal-03834620, HAL.
    • Handle: RePEc:hal:journl:hal-03834620
    Note: View the original document on HAL open archive server: https://hal.science/hal-03834620
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