What Lures Venture Capital Inflows?

Posted: 19 Jun 2014

See all articles by Andrea Schertler

Andrea Schertler

Leuphana University of Lueneburg

Tereza Tykvova

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Date Written: 2012

Abstract

We investigate if economic factors drive gross and net cross-border venture capital inflows differently. Using a dataset of venture capital investments in European and North American countries from 2000 to 2008, we find that higher expected economic growth goes hand in hand with higher gross as well as net inflows, while higher market capitalization and a more favorable environment for venture capital intermediation entail higher gross inflows, but lower net inflows. The latter two findings may suggest that cross-border venture capital inflows partly compensate for potential limits in domestic venture capital supply. However, the findings may also reflect that venture capitalists’ locational decisions depend on the viability of capital markets.

Keywords: Venture capital, Internationalization, Gross and net cross-border inflows, Economic factors

JEL Classification: F21, G24

Suggested Citation

Schertler, Andrea and Tykvova, Tereza, What Lures Venture Capital Inflows? (2012). Journal of International Money and Finance, Vol. 31, 2012, Available at SSRN: https://ssrn.com/abstract=2456236

Andrea Schertler (Contact Author)

Leuphana University of Lueneburg ( email )

Scharnhorststrasse 1
LĂĽneburg, 21314
Germany

Tereza Tykvova

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Germany

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