The Regional Supply of Venture Capital: Can Syndication Overcome Bottlenecks?

Michael J. Fritsch · Dirk Schilder

42 citations0/0 files storedEconomic Geography

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Private Equity and Venture Capital Regional Economics and Spatial Analysis FinTech, Crowdfunding, Digital Finance

Abstract

abstract In our study, we investigated whether the supply of venture capital (VC) is driven by spatial proximity between a VC company and the portfolio firm. Our analysis was based on information about VC investments in Germany between 2004 and 2009. We found that possible problems caused by the geographic distance to a portfolio firm seem to be overcome by the syndication of investments with one of the VC firms located close to the investment. The results suggest, however, that a short geographic distance between an investor and the investment has an increasing effect on the probability of syndication as well as on the number of firms that join the syndicate. Hence, local VC suppliers may assume the role of an anchor, connecting the regional economy to more distant parts of the industry.

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References

1990The structure and governance of venture-capital organizations 2002Does Distance Still Matter? The Information Revolution in Small Business Lending 1995Optimal Investment, Monitoring, and the Staging of Venture Capital 2001The Venture Capital Revolution 2001Syndication Networks and the Spatial Distribution of Venture Capital Investments 1999The venture capital cycle 2009Why encouraging more people to become entrepreneurs is bad public policy 1995Venture Capitalists and the Oversight of Private Firms

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2016Geographic distance between venture capitalists and target firms and the value of quality signals 2021The geography of business angel investments in the UK: Does local bias (still) matter?2013Venture Capital Investors and Portfolio Firms 2017Hi-tech start-ups: legitimacy challenges and funding dynamics 2019Geographies of relational coordination in venture capital firms 2020The Entrepreneurial Society

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