GDPR and the Localness of Venture Investment

53 Pages Posted: 16 Aug 2019 Last revised: 26 Jan 2020

See all articles by Jian Jia

Jian Jia

Illinois Institute of Technology - Stuart School of Business

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Liad Wagman

Illinois Institute of Technology - Stuart School of Business, IIT

Date Written: January 23, 2020

Abstract

We examine how investors' tendency to invest locally interacts with Europe's General Data Protection Regulation (GDPR). Using five-year investment data, we demonstrate that GDPR differentially affects investors as a function of their proximity to ventures. We show that GDPR's rollout in May 2018 has negative effects on EU venture investment, and the effects are larger when ventures and lead investors are not in the same state or union. The relationship manifests in the number of deals and the amount invested per deal, and is pronounced for newer, data-related, and consumer-facing ventures, as well as for repeat investments. GDPR's earlier enactment in April 2016 exhibits similar effects for investors that invest out of their preferred industries.

Keywords: GDPR, investment, local preference, technology, new ventures

JEL Classification: G11, K20, D8

Suggested Citation

Jia, Jian and Jin, Ginger Zhe and Wagman, Liad, GDPR and the Localness of Venture Investment (January 23, 2020). Available at SSRN: https://ssrn.com/abstract=3436535 or http://dx.doi.org/10.2139/ssrn.3436535

Jian Jia (Contact Author)

Illinois Institute of Technology - Stuart School of Business ( email )

Stuart Graduate School of Business
565 W. Adams St. 4th floor
Chicago, IL 60661
United States

Ginger Zhe Jin

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Liad Wagman

Illinois Institute of Technology - Stuart School of Business, IIT ( email )

565 W Adams St Suite 412
Chicago, IL 60661
United States
7739809883 (Phone)

HOME PAGE: http://https://lwagman.org

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