Law, Finance, and Venture Capital: The Cost of Capital for High-Tech Firms

68 Pages Posted: 13 Dec 2007

See all articles by Thomas W. Hall

Thomas W. Hall

Christopher Newport University

Multiple version iconThere are 2 versions of this paper

Date Written: September 2006


We use data from a professionally-conducted survey of high-technology managers to examine international variation in private equity contracting and cost of capital. Employing new variables and analyzing hundreds of financing rounds in the U.S., Europe, and Israel, we find that the sophistication of investors and the number of nonpecuniary services they provide are significantly associated with the ownership ratio (amount raised/valuation), but that funding rounds in the United States do not receive lower ownership ratios than elsewhere. We also find that useful patents are associated with a lower cost of capital, and that the institutional environment for entrepreneurial finance is related to exit strategy and valuation.

Keywords: Venture capital, international finance, valuation, legal origin

JEL Classification: G24, G32

Suggested Citation

Hall, Thomas William, Law, Finance, and Venture Capital: The Cost of Capital for High-Tech Firms (September 2006). Paris December 2007 Finance International Meeting AFFI-EUROFIDAI Paper, Available at SSRN: or

Thomas William Hall (Contact Author)

Christopher Newport University ( email )

United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics