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Is Venture Capital a regional business? – The role of syndication

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  • Michael Fritsch
  • Dirk Schilder

Abstract

We investigate whether the supply of Venture Capital (VC) in Germany is driven by spatial influences. The study is based on information from more than 300 VC investments made in Germany between 2004 and 2005. We find evidence that the geographical distance between a VC company and the portfolio firm is not an important factor for German VC investments. Syndication of investments helps to overcome the problem of distance to portfolio firms if one of the investors is located close to the investment. Altogether, we find no evidence for a severe regional equity gap for young and innovative companies in Germany.

Suggested Citation

  • Michael Fritsch & Dirk Schilder, 2006. "Is Venture Capital a regional business? – The role of syndication," Papers on Entrepreneurship, Growth and Public Policy 2006-25, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    • Handle: RePEc:esi:egpdis:2006-25
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    References listed on IDEAS

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    1. Michael Fritsch & Dirk Schilder, 2008. "Does Venture Capital Investment Really Require Spatial Proximity? An Empirical Investigation," Environment and Planning A, , vol. 40(9), pages 2114-2131, September.
    2. Bender, Marko & Lutz, Eva, 2009. "Patterns in spatial proximity between venture capital investors and investees in Germany: an empirical analysis," CEFS Working Paper Series 2009-06, Technische Universität München (TUM), Center for Entrepreneurial and Financial Studies (CEFS).
    3. Achleitner, Ann-Kristin & Bender, Marko & Kaserer, Christoph & Lutz, Eva, 2010. "Geographic location of a new venture and the likelihood of a venture capital investment," CEFS Working Paper Series 2010-02, Technische Universität München (TUM), Center for Entrepreneurial and Financial Studies (CEFS).
    4. Alexandra Schröter, 2008. "Perspektiven der Innovationspolitik in den neuen Bundesländern," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 15(02), pages 40-52, 04.
    5. Angelo Cavallo & Antonio Ghezzi & Cristina Rossi-Lamastra, 2021. "Small-medium enterprises and innovative startups in entrepreneurial ecosystems: exploring an under-remarked relation," International Entrepreneurship and Management Journal, Springer, vol. 17(4), pages 1843-1866, December.
    6. Achleitner, Ann-Kristin & Braun, Reiner & Bender, Marko & Geidner, Annabell, 2008. "Community development venture capital: concept and status quo in Germany," CEFS Working Paper Series 2008-03, Technische Universität München (TUM), Center for Entrepreneurial and Financial Studies (CEFS).
    7. Marian SOCOLIUC, 2016. "The Particularities Of Financial Communication In The Retails Companies," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 5(2), pages 1-31, July.
    8. Wallisch Matthias, 2009. "Unternehmensfinanzierung durch Business Angels: Zur räumlichen Organisation des informellen Beteiligungskapitalmarktes in Deutschland," ZFW – Advances in Economic Geography, De Gruyter, vol. 53(1-2), pages 47-68, October.
    9. Schilder, Dirk, 2007. "Venture capital syndicate networks: the determinants of interconnectedness," Freiberg Working Papers 2007/03, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
    10. Schilder, Dirk, 2006. "Public venture capital in Germany: task force or forced task?," Freiberg Working Papers 2006/12, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
    11. Dylan Jones-Evans & Piers Thompson, 2008. "The Spatial Dispersion of Informal Investment at a Regional Level: Evidence from the UK," European Planning Studies, Taylor & Francis Journals, vol. 17(5), pages 659-675, May.

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    More about this item

    Keywords

    Venture Capital; regional equity gap; start-up financing;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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