Is the Behavior of German Venture Capitalists Different? Evidence from the Neuer Mark
Using a unique, hand-collected database of all venture-backed firms listed on Germany´s Neuer Markt, we analyze the history of venture capital financing of these firms before the IPO and the behavior of venture capitalists at the IPO. We can detect significant differences in the behavior and characteristics of German vs. foreign venture capital firms. The discrepancy in the investment and divestment strategies may be explained by the grandstanding phenomenon, the value-added hypothesis and certification issues. German venture capitalists are typically younger and smaller than their counterparts from abroad. They syndicate less. The sectoral structure of their portfolios differs from that of foreign venture capital firms. We also find that German venture capitalists typically take companies with lower offering volumes on the market. They usually finance firms in a later stage, carry through fewer investment rounds and take their portfolio firms public earlier. In companies where a German firm is the lead venture capitalist, the fraction of equity held by the group of venture capitalists is lower, their selling intensity at the IPO is higher and the committed lock-up period is longer.
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- Catherine Casamatta, 2003.
"Financing and Advising: Optimal Financial Contracts with Venture Capitalists,"
Journal of Finance,
American Finance Association, vol. 58(5), pages 2059-2086, October.
- Casamatta, Catherine, 2002. "Financing and Advising: Optimal Financial Contracts with Venture Capitalists," CEPR Discussion Papers 3475, C.E.P.R. Discussion Papers.
- Audretsch, David B & Lehmann, Erik, 2002. "Debt or Equity? The Role of Venture Capital in Financing the New Economy in Germany," CEPR Discussion Papers 3656, C.E.P.R. Discussion Papers.
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