Connectedness of entrepreneurial ecosystems: the impact of VC financing mobility on startup valuations

Peter Wirtz () and Max Berre ()
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Peter Wirtz: Emlyon Business School
Max Berre: Università degli Studi di Milano-Bicocca

Small Business Economics, 2025, vol. 65, issue 3, No 2, 1325 pages

Abstract: Abstract National venture capitalist (VC) ecosystems are not isolated from each other, and foreign VC species may cross borders when pursuing valuable investment opportunities. The present research demonstrates that VC investments inside or outside VCs’ domestic ecosystems play a significant role in the target ventures’ valuation. VCs trade off familiarity of their domestic ecosystem for valuation. Our results indicate that familiarity with the domestic ecosystem reduces risk, and purely domestic deals consequently carry significantly positive valuation premia. Cross-border deals, on the other hand, have a significantly negative impact on valuation. However, certain comparative ecosystem characteristics, such as institutional shareholder protections and an ecosystem’s comparative competitive advantage, as well as an ecosystem’s relative saturation in terms of money on the market, partially offset the observed cross-border valuation penalty.

Keywords: Entrepreneurial ecosystems; VC ecosystems; Cross-border deals; Startup valuation (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11187-025-01021-6

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