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Buy local? The geography of venture capital

Henry Chen, Paul Gompers (), Anna Kovner and Josh Lerner ()

Journal of Urban Economics, 2010, vol. 67, issue 1, 90-102

Abstract: We document geographic concentration by both venture capital firms and venture capital-financed companies in three metropolitan areas: San Francisco, Boston, and New York. We find that venture capital firms locate in regions with high success rates of venture capital-backed investments. Geography is also significantly related to outcomes. Venture capital firms based in locales that are venture capital centers outperform, regardless of the stage of the investment. This outperformance arises from outsized performance outside of the venture capital firms' office locations, including in peripheral locations. If the goal of state and local policy makers is to encourage venture capital investment, outperformance of non-local investments suggests that policy makers might want to mitigate costs associated with established venture capitalists investing in their geographies rather than encouraging the establishment of new venture capital firms.

Keywords: Entrepreneurship; Performance; measurement; Start-ups; Private; equity; Localization (search for similar items in EconPapers)
Date: 2010
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Chapter: Buy Local? The Geography of Venture Capital (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:67:y:2010:i:1:p:90-102

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