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Venture Capital Performance: The Disparity Between Europe and the United States / Performances du capital risque : Les disparités entre l'Europe et les États-Unis

Abstract : This paper compares the success of venture capital investments in the United States and in Europe by analyzing individual venture-backed companies and the value generated within the stage financing process. We document that US venture capitalists generate significantly more value with their investments than their European counterparts. We find differences in contracting behavior, such as staging frequency and syndication, and evidence that they help to explain the observed performance gap and we report a substantial unexplained residual. We find that US venture funds investing in Europe do not perform better their European peers. European Common Law and Civil Law countries exhibit comparable levels of venture performance, and differences in stock market development or tax subsidies in favor of venture investments are unrelated to performance differences. European IPO exits from venture investments yield returns similar to the US, while trade sale exits weakly underperform. We attribute the overall performance gap essentially to the segment of poorly performing companies.
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https://hal-hec.archives-ouvertes.fr/hal-00493173
Contributor : Antoine Haldemann <>
Submitted on : Friday, June 18, 2010 - 10:42:57 AM
Last modification on : Monday, January 6, 2020 - 5:50:13 PM

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  • HAL Id : hal-00493173, version 1

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Ulrich Hege, Frédéric Palomino, Armin Schwienbacher. Venture Capital Performance: The Disparity Between Europe and the United States / Performances du capital risque : Les disparités entre l'Europe et les États-Unis. Finance, Presses universitaires de Grenoble, 2009, Vol.30,nº1, pp.7-50. ⟨hal-00493173⟩

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