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Does Venture Capital Investment Really Require Spatial Proximity? An Empirical Investigation

Michael Fritsch and Dirk Schilder

Papers on Entrepreneurship, Growth and Public Policy from Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group

Abstract: We examine the role of spatial proximity for Venture Capital (VC) investments in Germany. The main database is a survey of 85 personal interviews with representatives of different types of financial institutions. The analysis shows that spatial proximity is far less important for VC investments than is often believed. For example, the results indicate that syndication is partly used as an alternative to spatial proximity. Telecommunication does not work as a substitute for face-to-face contact. On the whole, regional proximity is not a dominant factor in VC partnerships. Therefore, the absence of VC firms in a region does not appear to cause a severe regional equity gap.

Keywords: Venture Capital; spatial proximity; start-up financing (search for similar items in EconPapers)
JEL-codes: D21 G24 M13 O16 R12 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2006-05
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-ent, nep-fin, nep-fmk, nep-geo, nep-ino and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Journal Article: Does Venture Capital Investment Really Require Spatial Proximity? An Empirical Investigation (2008) Downloads
Working Paper: Does venture capital investment really require spatial proximity? An empirical investigation (2006) Downloads
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