The role of venture capital in alleviating financial constraints of innovative firms

Laura Bottazzi

No 9/2009, EIB Papers from European Investment Bank, Economics Department

Abstract: Venture capital is considered to be the most appropriate form of financing for innovative firms in high-tech sectors. We provide an assessment of venture capital with some of Europe’s most innovative and successful companies: those listed on Europe’s “new” stock markets. Venture capital is effective in helping these firms overcome credit constraints but has a limited effect on their ability to grow and create jobs. This result clashed with the evidence on the role of VC for US companies. Yet, VC is not only about money but also about steering and supporting portfolio companies, activities which depend on venture capitalists’ educational and organizational background as well as on the legal and cultural environment in which they operate.

Keywords: Venture capital; innovative firm; financing constraint; start-up; IPO; investor activism; legal system (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2009-12-23
New Economics Papers: this item is included in nep-eec and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:eibpap:2009_009

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