Investment screening and venture capital

Vera Eichenauer, Stefan Köppl and Monika Köppl-Turyna

No 30, Research Papers from EcoAustria – Institute for Economic Research

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.

Keywords: cross-border venture capital; investment screening; Europe; transaction costs (search for similar items in EconPapers)
JEL-codes: F21 F55 G24 L14 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-cfn, nep-eec, nep-ent and nep-inv
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ecoarp:308092

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