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The law and finance of venture capital financing in Europe: findings from the RICAFE research project

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

MPRA Paper from University Library of Munich, Germany

Abstract: This survey article summarizes 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 39 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)
JEL-codes: G24 (search for similar items in EconPapers)
Date: 2005-11
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Related works:
Working Paper: The Law and Finance of Venture Capital Financing in Europe: Findings from the RICAFE Resarch Project (2006)
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