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Investment screening and venture capital

Author

Listed:
  • Eichenauer, Vera
  • Köppl, Stefan
  • Köppl-Turyna, Monika

Abstract

In this paper we analyze the effects of investment screening on cross-border venture capital investments in Europe between 2007 and 2022. The data we work with is originally based on PRISM data which has been extended by Eichenauer and Wang and which we combine with deal data from Preqin to assess investment activity. Our results point to unintended negative effects: while the number of actually blocked deals has remained very low, the associated uncertainty and an increase in transaction costs have led to a significant decline in cross-border deals. The effects are stronger in the case of financial (i.e. 'non-strategic') investors, for late-stage venture capital deals, and for deals with investors from non-OECD countries. Moreover, we observe changes in the size of deals and their structure. This has profound policy implications for the financing of innovation in Europe.

Suggested Citation

  • Eichenauer, Vera & Köppl, Stefan & Köppl-Turyna, Monika, 2024. "Investment screening and venture capital," Research Papers 30, EcoAustria – Institute for Economic Research.
    • Handle: RePEc:zbw:ecoarp:308092
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    More about this item

    Keywords

    cross-border venture capital; investment screening; Europe; transaction costs;
    All these keywords.

    JEL classification:

    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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