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How European countries attract institutional investors. Venture capital and private equity allocations

Groh, Alexander P. and Liechtenstein, Heinrich and Lieser, Karsten (2009):
How European countries attract institutional investors. Venture capital and private equity allocations.
In: SECA – Swiss Private Equity & Corporate Finance Association (Hrsg.), SECA Yearbook 2009, pp. 34-40, Zug (Schweiz), [Book Section]

Abstract

Why is there such a strong market for Venture Capital (VC) and Private Equity (PE) in the United Kingdom, why is there relatively little activity in Germany, and why is activity close to zero in Greece or in some of the new European Union accession countries? Spatial variations in VC/PE activity result from numerous factors. Institutional investors (Limited Partners or LPs) allocate their capital via chains of agents and networks in certain regions, and among countries. Usually, there is a concentration in "hotspots" or core economic centers. These hotspots evolve mainly for two reasons. First, there is a professional community to support transactions, and to establish the capital supply side. Second, there must be expectation for demand of the committed capital. Therefore, LPs make a geographical selection of promising spots. The selection depends on their expectation of the demand for VC/PE, and on their evaluation of the host country.s professional community. We address this allocation process and discuss the criteria proposed in the literature that determine both supply and demand for VC and PE in a particular country. In a next step, we gather 42socio-economic data series to assess the quality of these criteria in Europe, and aggregate the data to the European Venture Capital and Private Equity Country Attractiveness Indexes.

Item Type: Book Section
Erschienen: 2009
Creators: Groh, Alexander P. and Liechtenstein, Heinrich and Lieser, Karsten
Title: How European countries attract institutional investors. Venture capital and private equity allocations
Language: English
Abstract:

Why is there such a strong market for Venture Capital (VC) and Private Equity (PE) in the United Kingdom, why is there relatively little activity in Germany, and why is activity close to zero in Greece or in some of the new European Union accession countries? Spatial variations in VC/PE activity result from numerous factors. Institutional investors (Limited Partners or LPs) allocate their capital via chains of agents and networks in certain regions, and among countries. Usually, there is a concentration in "hotspots" or core economic centers. These hotspots evolve mainly for two reasons. First, there is a professional community to support transactions, and to establish the capital supply side. Second, there must be expectation for demand of the committed capital. Therefore, LPs make a geographical selection of promising spots. The selection depends on their expectation of the demand for VC/PE, and on their evaluation of the host country.s professional community. We address this allocation process and discuss the criteria proposed in the literature that determine both supply and demand for VC and PE in a particular country. In a next step, we gather 42socio-economic data series to assess the quality of these criteria in Europe, and aggregate the data to the European Venture Capital and Private Equity Country Attractiveness Indexes.

Title of Book: SECA – Swiss Private Equity & Corporate Finance Association (Hrsg.), SECA Yearbook 2009, pp. 34-40
Place of Publication: Zug (Schweiz)
Divisions: 01 Department of Law and Economics > Betriebswirtschaftliche Fachgebiete > Fachgebiet Immobilienwirtschaft und Baubetriebswirtschaftslehre
01 Department of Law and Economics
01 Department of Law and Economics > Betriebswirtschaftliche Fachgebiete
Date Deposited: 04 Dec 2009 14:16
Additional Information:

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