The Staying Power of Face-to-face in the Global Venture Capital Market

Andrea Bellucci (), Alexander Borisov (), Gianluca Gucciardi and Alberto Zazzaro ()
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Andrea Bellucci: University of Insubria and MoFiR

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: Technological advancements and globalization of venture capital (VC) point to a diminishing role of direct face-to-face (F2F) interactions between VCs and entrepreneurs seeking funding. We show that ability to conduct such interactions remains an important factor for segments of the VC market, and especially for its internationalization. Using a sample of VC deals around the world, and the staggered implementation of travel restrictions across countries in response to the spread of Covid-19 in 2020, we find that investment by foreign VCs in a country drops after it halts inbound travel. Our analysis of possible channels suggests that information asymmetry between contracting parties is the main driver of the importance of F2F, while technological constraints on the transmission of information and cultural differences are less significant.

Keywords: Face-to-Face Interaction; Investments; Venture Capital (search for similar items in EconPapers)
JEL-codes: D81 E22 E44 F21 G24 (search for similar items in EconPapers)
Date: 2024-06-23
New Economics Papers: this item is included in nep-cfn, nep-ent and nep-inv
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Related works:
Working Paper: THE STAYING POWER OF FACE-TO-FACE IN THE GLOBAL VENTURE CAPITAL MARKET (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:721

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