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The geography of technology-intensive start-ups and venture capital: European evidence

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Abstract

This paper aims at providing novel evidence about the geographical concentration of venture capital (VC) activity in seven European countries. Drawing upon a unique dataset, VICO 2.0, we describe the geographical distribution of VC investments and VC-backed technology-intensive start-ups and analyse the regional and country-level factors associated to the regional concentration in VC activity. Results from econometric estimates suggest that regional VC activity is positively associated to the level of regional knowledge intensity, the level of regional human capital, the local supply of VC investors and a more favourable country’s legal and institutional environment.

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Notes

  1. http://risis.eu.

  2. VICO has been used in several academic publications that have empirically investigated the impact of VC financing on start-up performance (e.g., Croce et al. 2013; Bertoni and Tykvová 2015; Colombo and Shafi 2016; Guerini and Quas 2016).

  3. http://ec.europa.eu/eurostat/statistics-explained/index.php/Thematic_glossaries.

  4. As the main focus of this work is on the geography of VC-backed technology-intensive start-ups and VC investments, we also excluded from the analysis investments made by non-VC investors, such as business angels.

  5. We used this approach in order to limit the problem of missing values for assets, turnover and number of employees.

  6. We treat Greater London area at the NUTS1 level for comparability purposes.

  7. Alternatively, in unreported estimates we consider as a robustness check the country legal origin (La Porta et al. 1997, 1998): French, German, Scandinavian, or English. Results are available from the authors upon request.

  8. Variance Inflation Factor analysis confirm that multicollinearity is not a concern in reported results.

  9. In additional estimates, we include in our econometric models a dummy variable that equals one for Italian regions for each observation subsequent to 2012. This result seems to suggest that after the implementation of this policy initiative, both the number of VC-backed technology-intensive start-ups and the number of VC investment in Italy significantly increased. Estimates are omitted here, but available upon authors’ request.

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Acknowledgements

The authors acknowledge support from the “RISIS—Research infrastructures for the assessment of science, technology and innovation policy” project, funded by the European Union under the Seventh Framework Programme (Grant Agreement no. 313082).

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  1. Department of Management, Economics and Industrial Engineering, School of Management, Politecnico di Milano, Via Lambruschini 4/b, 20156, Milan, Italy

    Massimiliano Guerini & Francesca Tenca

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  1. Massimiliano Guerini
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Correspondence to Francesca Tenca.

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Guerini, M., Tenca, F. The geography of technology-intensive start-ups and venture capital: European evidence. Econ Polit Ind 45, 361–386 (2018). https://doi.org/10.1007/s40812-018-0098-9

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