Geographical and institutional distances in venture capital deals: How syndication and experience drive internationalization patterns

Tereza Tykvová and Andrea Schertler ()

No 11-022, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Drawing on a novel dataset of worldwide venture capital deals, we investigate how venture capitalists (VCs) overcome the complexity of investing in geographically and institutionally distant regions. Our results indicate that syndicating with local VCs is a common way for foreign VCs to gain deal access, overcome the complexity of investing in distant regions and offset their lack of within-country experience. The foreign VC's distance from the portfolio company ceases to be a serious investment obstacle when he can rely on a highly experienced local VC. Our results further suggest that inexperienced VCs, i.e. those VCs with a large need for syndication, increase their chances to invest across borders when they invest in small deals jointly with local inexperienced partners.

Keywords: Multiple Regression Analysis; Syndicates; Venture Capital; Internationalization; Distance; Experience (search for similar items in EconPapers)
JEL-codes: F21 G24 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-ent, nep-geo and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:11022

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