Determinants of Venture Capital Investment in Europe: Evidence from Innovation-System Indicators (2013–2020)

Bojan Ćudić, Miroslav Todorović, Snežana Kirin and David Hazemali
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Bojan Ćudić: Digital Innovation Hub ONEX
Miroslav Todorović: University of Belgrade, Faculty of Economics
Snežana Kirin: University of Belgrade, Innovation Centar of the Faculty of Mechanical Engineering
David Hazemali: University of Maribor

Ekonomski pregled, 2026, vol. 77, issue 3, 139-167

Abstract: This paper examines country-level determinants of venture capital investment (VCI) across 22 European economies from 2013 to 2020. We combine Invest Europe VCI totals with 14 indicators from the Global Innovation Index (GII) and classify each indicator into quintile tiers. Using oneway ANOVA with Tukey HSD post-hoc tests, we assess whether VCI differs systematically across tiers for each determinant. VCI is highly concentrated: France and Germany form a persistent upper tail, followed by the Netherlands, while Romania, Bulgaria, and Greece sit at the lower end. Eleven of fourteen indicators display significant between-tier differences in VCI: business environment, government effectiveness, gross expenditure on R&D, human capital and research, ICT access, ICT use, knowledge & technology outputs, knowledge creation, patent applications, PCT applications, and university–industry collaboration. By contrast, creative goods & services, ICT services exports, and political/operational stability do not discriminate VCI within this European sample. Results are robust to alternative binning, log-VCI transformation, and exclusion of the largest ecosystems. We interpret the patterns as consistent with VCI concentrating where institutional quality is strong, innovation inputs are deep, digital readiness is advanced, and knowledge/IP outputs are abundant. The findings offer actionable priorities for policy aimed at strengthening SME finance ecosystems, while acknowledging the study’s associative design and the aggregation of VCI across stages and sectors.

Keywords: venture capital; innovation; Global Innovation Index; Europe; R&D; digital readiness; ANOVA. (search for similar items in EconPapers)
JEL-codes: C38 G24 O31 O38 (search for similar items in EconPapers)
Date: 2026
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