The patterns of venture capital investment in Europe

Bertoni, Fabio; Colombo, Massimo G.; Quas, Anita

doi:10.1007/s11187-015-9662-0

Cited by 130 publications

(106 citation statements)

References 63 publications

(80 reference statements)

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“…We excluded firms that raised equity crowdfunding from Crowdcube, Seedrs, or any other platform. We then used the coarsened exact matching and nearest neighbor matching algorithm (e.g., Bertoni, Colombo, & Quas, 2015) to select NECF firms that are similar to our ECF firms and raised capital in the same year. We perform all matching with replacement since Abadie and Imbens (2012) argue that this reduces possible biases.…”

Section: Ecf-necf Matched Samplementioning

confidence: 99%

Equity crowdfunding, shareholder structures, and firm performance

Walthoff-Borm

Vanacker

Collewaert

2018

Corporate Governance

113

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Research question/issue This paper provides a first‐time glimpse into the postcampaign financial and innovative performance of equity‐crowdfunded (ECF) and matched nonequity‐crowdfunded (NECF) firms. We further investigate how direct and nominee shareholder structures in ECF firms are associated with firm performance. Research findings/insights We find that ECF firms have 8.5 times higher failure rates than matched NECF firms. However, 3.4 times more ECF firms have patent applications than matched NECF firms. Within the group of ECF firms, we find that ECF firms financed through a nominee structure make smaller losses, whereas ECF firms financed through a direct shareholder structure have more new patent applications, including foreign patent applications. Theoretical/academic implications Our findings suggest that there are important adverse selection issues on equity crowdfunding platforms, although these platforms also serve as a catalyst for innovative activities. Moreover, our findings suggest that there is a more complex relationship between dispersed versus concentrated crowd shareholders and firm performance than currently assumed in the literature. Practitioner/policy implications For policy makers and crowdfunding platforms, investor protection against adverse selection will be important to ensure the sustainability of equity crowdfunding markets. For entrepreneurs and crowd investors, our study highlights how equity crowdfunding and the adopted shareholder structure relate to short‐term firm performance.

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Section: Ecf-necf Matched Samplementioning

confidence: 99%

Equity crowdfunding, shareholder structures, and firm performance

Walthoff-Borm

Vanacker

Collewaert

2018

Corporate Governance

113

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“…First, with respect to booms and busts in general, booms and busts in VC investment have been documented by Buzzacchi, Scellato, and Ughetto (2015), Cumming, Fleming, and Schwienbacher (2005), and Gompers and Lerner (1999), among others. Second, region-specific patterns of VC activity have been documented by Bertoni, Colombo, and Quas (2015) and Bozkaya and Kerr (2014) for Europe. International analyses of VC investment patterns linked to differences in institutional settings have been examined, among others, by Bertoni and Groh (2014), Bonini, Alkan, and Salvi (2012), Dai and Nahata (2016), Guler and Guillén (2010), Johan, Schweizer, and Zhan (2014), Li and Zahra (2012), Schertler and Tykvová (2012), Schwienbacher (2008), Tykvova and Schertler (2014), and Wang and Wang (2012).…”

mentioning

confidence: 99%

Fintech venture capital

Cumming

Schwienbacher

2018

Corporate Governance

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Manuscript Type Empirical Research Question/Issue Where are fintech venture capital investments taking place around the world? What is the role of institutional factors on the international allocation of fintech venture capital? Research Findings/Insights We document a notable change in the pattern of fintech venture capital (VC) investments around the world relative to other types of investments after the global financial crisis. We show that fintech venture capital investments are relatively more common in countries with weaker regulatory enforcement and without a major financial center after the financial crisis. Also, we show the fintech boom is more pronounced for smaller private limited partnership venture capitalists that likely have less experience with prior venture capital booms and busts. These fintech VC deals are substantially more likely to be liquidated, especially when located in countries without a major financial center. Theoretical/Academic Implications We build on the institutions and corporate governance literatures by showing the importance of enforcement in driving relative differences in investment patterns and investor participation. For entrepreneurial startups, regulatory arbitrage drives investment into countries with a dearth of enforcement and regulatory costs. We argue that the spike in fintech venture capital in certain countries is attributable to differential enforcement of financial institution rules amongst startups versus large established financial institutions after the financial crisis. Practitioner/Policy Implications Regulatory arbitrage in the context of fintech venture capital can spur booms and busts. Less experienced venture capitalists seem more prone to undertake investments that exacerbate boom and bust cycles. National governance is strengthened by the enforcement of regulatory standards, and corporate governance through investor experience and oversight can mitigate these swings, and facilitate better investment outcomes.

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“…Bertoni et al . () illustrate that corporate VC investors are 77.4% more inclined to invest across borders. Governments VC investors, however, are especially specialized in domestic companies.…”

Section: Avenues For Future Researchmentioning

confidence: 97%

“…These VC investors seem better able to reduce information asymmetries associated with distance. In contrast, government-related VC firms have a narrow geographic scope (Bertoni et al, 2015). Finally, VC firms in which investment managers can devote more time to their portfolio companies (i.e., VC firms with more investment executives per portfolio company) also have a broader geographic scope (Fritsch and Schilder, 2008), consistent with larger distance requiring higher time commitments of the VC investors.…”

Section: Vc Firm-level Determinantsmentioning

confidence: 99%

Venture Capital Internationalization: Synthesis and Future Research Directions

Devigne

Manigart

Vanacker

et al. 2018

Journal of Economic Surveys

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Abstract. Research on venture capital (VC) internationalization has expanded rapidly over the last decade. This paper reviews the extant literature on VC internationalization and highlights gaps in our knowledge. We identify three major research streams within this literature, which revolve around the following questions: (1) which VC firms invest across borders and what countries do they target; (2) how do VC firms address liabilities of foreign investing; and (3) what are the real effects of international VC investments? We provide an overview of the contributions in these research streams, discuss the role of public policy, and suggest avenues for future research. Specifically, we call for a deeper understanding of: (1) the functioning and impact of VC firms' modes of internationalization; (2) micro-level processes such as the functioning and decision making of international investment committees, or the development of international human and social capital; (3) the role of country institutions in VC internationalization and its real effects; and (4) the interplay of international VC with alternative financing sources.

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The patterns of venture capital investment in Europe

Cited by 130 publications

References 63 publications

Equity crowdfunding, shareholder structures, and firm performance

Equity crowdfunding, shareholder structures, and firm performance

Fintech venture capital

Venture Capital Internationalization: Synthesis and Future Research Directions

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