Foreign Investors and Domestic Company Growth: Evidence from US Venture Capital Investments in Sweden

41 Pages Posted: 9 May 2019

See all articles by Thomas F. Hellmann

Thomas F. Hellmann

University of Oxford - Said Business School; University of Oxford - Said Business School

Alexander Montag

University of Oxford - Said Business School

Joacim Tåg

Research Institute of Industrial Economics (IFN)

Multiple version iconThere are 2 versions of this paper

Date Written: April 2019

Abstract

Do foreign venture capitalists help the domestic economy, or hamper it by slowing down growth, potentially moving economic activity away? This paper addresses this long-standing policy question by examining the differential effects of US venture capital investments on the growth of Swedish start-up companies. It finds that US venture capital results in more employment, not less. These findings continue to hold after controlling for endogenous selection effects. US investments are also accompanied by increases in local employment and start-up rates. The paper also examines effect on wages, sales, earnings, foreign subsidiaries, subsequent funding rounds, and exits. Overall there is no evidence that US venture capital investments hamper the domestic growth of Swedish companies.

Keywords: Domestic, Employment, Foreign, International, Venture Capital

JEL Classification: G24, J21, F16, F30, F65, F66

Suggested Citation

Hellmann, Thomas F. and Montag, Alexander and Tåg, Joacim, Foreign Investors and Domestic Company Growth: Evidence from US Venture Capital Investments in Sweden (April 2019). IFN Working Paper No. 1272 (2019). Available at SSRN: https://ssrn.com/abstract=3372976 or http://dx.doi.org/10.2139/ssrn.3372976

Thomas F. Hellmann

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 (0)1865 288937 (Phone)

HOME PAGE: http://www.sbs.ox.ac.uk/community/people/thomas-hellmann

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 (0)1865 288937 (Phone)

HOME PAGE: http://www.sbs.ox.ac.uk/community/people/thomas-hellmann

Alexander Montag

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://www.sbs.ox.ac.uk/about-us/people/alexander-montag

Joacim Tåg (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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