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The role of venture capital in alleviating financial constraints of innovative firms

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  • Bottazzi, Laura

    () (Bologna University, Italy)

Abstract

Venture capital is considered to be the most appropriate form of financing for innovative firms in high-tech sectors. We provide an assessment of venture capital with some of Europe’s most innovative and successful companies: those listed on Europe’s “new” stock markets. Venture capital is effective in helping these firms overcome credit constraints but has a limited effect on their ability to grow and create jobs. This result clashed with the evidence on the role of VC for US companies. Yet, VC is not only about money but also about steering and supporting portfolio companies, activities which depend on venture capitalists’ educational and organizational background as well as on the legal and cultural environment in which they operate.

Suggested Citation

  • Bottazzi, Laura, 2009. "The role of venture capital in alleviating financial constraints of innovative firms," EIB Papers 9/2009, European Investment Bank, Economics Department.
  • Handle: RePEc:ris:eibpap:2009_009
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    Cited by:

    1. Michele Cincera & Anabela Marques Santos, 2015. "Innovation and Access to Finance – A Review of the Literature," iCite Working Papers WP2015-16, ULB -- Universite Libre de Bruxelles.
    2. Ajai Chopra, 2015. "Financing Productivity- and Innovation-Led Growth in Developing Asia: International Lessons and Policy Issues," Working Paper Series WP15-6, Peterson Institute for International Economics.
    3. Michele Cincera & Anabela Santos, "undated". "Innovation and Access to Finance," IRMO Occasional Papers 6, Institute for Development and International Relations, Zagreb.
    4. Veysov, Alexander, 2012. "Financial System Classification: From Conventional Dichotomy to a More Modern View," MPRA Paper 40613, University Library of Munich, Germany.
    5. Veysov, Alexander & Stolbov, Mikhail, 2011. "The impact of financial sector on innovation activity: theoretical background and new evidence from russian banking sector," MPRA Paper 38747, University Library of Munich, Germany.

    More about this item

    Keywords

    Venture capital; innovative firm; financing constraint; start-up; IPO; investor activism; legal system;

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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