Cross-Border Investments and Venture Capital Exits in Europe

38 Pages Posted: 30 Dec 2013

See all articles by Fabio Bertoni

Fabio Bertoni

EM Lyon (Ecole de Management de Lyon) - Department of Economics, Finance, Control

Alexander Peter Groh

Luiss Guido Carli University - Luiss Business School; EMLYON Business School

Date Written: December 30, 2013

Abstract

We examine how the exit mode (i.e., initial public offering - IPO, trade sale, or write-off) of venture capital investments is influenced by additional exit opportunities brought by cross-border investors. We perform our analyses on a sample of 1,062 financing rounds in 462 high-tech start-ups in 7 European countries. Our findings indicate that, controlling for firm performance, investor characteristics, and local exit conditions, the probability of exiting via trade sale increases with the additional set of M&A opportunities brought by cross-border investors. A similar effect, but with weaker statistical significance, is detected for IPO exits. We reveal that cross-border investors may, at least partially, compensate for insufficient local exit possibilities. They can spillover the capital market activity of their home country and enhance exit options for young ventures. International syndicates are also quicker to write-off their non-performing investments. Hence, international syndication improves the proficiency of entrepreneurial finance relationships.

Keywords: Corporate Governance, Cross-border Ownership, Institutional Shareholder, Legal Efficiency, Cross-Listing, Mergers & Acquisitions

JEL Classification: G24, G32, G34

Suggested Citation

Bertoni, Fabio and Groh, Alexander Peter, Cross-Border Investments and Venture Capital Exits in Europe (December 30, 2013). Available at SSRN: https://ssrn.com/abstract=2373051 or http://dx.doi.org/10.2139/ssrn.2373051

Fabio Bertoni

EM Lyon (Ecole de Management de Lyon) - Department of Economics, Finance, Control ( email )

23, av. Guy de Collongue BP 174
69132 Ecully Cedex
France

Alexander Peter Groh (Contact Author)

Luiss Guido Carli University - Luiss Business School ( email )

Via Nomentana, 216
Roma, 00162
Italy

EMLYON Business School ( email )

23 Avenue Guy de Collongue
Ecully, 69132
France

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