Two Worlds of Venture Capital: What Happened to U.S. and Dutch Early Stage Investment?

Maria Brouwer () and Bart Hendrix

Small Business Economics, 1998, vol. 10, issue 4, 333-48

Abstract: European attempts at imitation of U.S. venture capital have been less successful in stimulating "high tech" start-ups. Our analysis of the differences between Dutch and U.S. developments points at institutional and organizational differences as explanatory factors. Disappointing longer term performances of Dutch IPOs have caused the closure of the Dutch Parallelmarket. Indeterminate length of life of Dutch vc funds contributed to a loss of trust in early stage IPOs. The United States--in contrast--benefitted from contractually fixed length of life of venture capital funds. The U.S. share of early stage investment displayed a wave-like pattern, which is positively related to the number of IPOs and of vc firms. Interconnectedness and follow-on funds depress early stage investment. Copyright 1998 by Kluwer Academic Publishers

Date: 1998
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