The Law and Finance of Venture Capital Financing in Europe: Findings from the RICAFE Resarch Project

Ulrich Hege, Marco Da Rin, Gerard Llobet and Uwe Walz ()

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Abstract: This survey article summarises the findings of four research projects on the venture capital industry in Europe and the role played by legal institutions and the legal framework. A study on patent litigation insurance argues that insurance can create a level playing field for small innovators, but that compulsory insurance can only be justified as a transitory scheme. The second study argues that intermediaries from countries with a better legal tradition will provide more governance and value-added services, even when investing abroad. It also provides supportive empirical evidence based on an extensive questionnaire study. The third project investigates the relationship between venture investments and a widely used legality index in thirty-nine countries, finding that better laws facilitate faster deal screening and origination, lead to a higher probability of syndication and also facilitate board representation of the investors. The final study documents a significant performance gap between the European and the US venture capital industry, but argues that the difference can not be attributed to differences in legal origin.

Keywords: venture capital; patent litigation; legal system; corporate governance; legality index; performance (search for similar items in EconPapers)
Date: 2006-06
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Citations: View citations in EconPapers (1)

Published in European Business Organization Law Review, 2006, Vol.7,n°2, pp.525-547. ⟨10.1017/S1566752906005258⟩

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Working Paper: The law and finance of venture capital financing in Europe: findings from the RICAFE research project (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00459932

DOI: 10.1017/S1566752906005258

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