Importance of spatial proximity between venture capital investors and investees in Germany |
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Authors: | Eva Lutz Marko Bender Ann-Kristin Achleitner Christoph Kaserer |
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Institution: | 1. Center for Entrepreneurial and Financial Studies (CEFS) and KfW Endowed Chair in Entrepreneurial Finance, TUM Business School, Technische Universität München, Arcisstr. 21, 80333 Munich, Germany;2. Center for Entrepreneurial and Financial Studies (CEFS) and Department of Financial Management and Capital Markets, TUM Business School, Technische Universität München, Arcisstr. 21, 80333 Munich, Germany |
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Abstract: | Based on 1182 dyads of venture capitalists and German portfolio companies involved in a financing round between 2002 and 2007, the study here examines the importance of spatial proximity between investors and investees in a dense economy. Analysis of this data shows that the probability of a financing relationship decreases by 8% if the journey time increases by one standard deviation. For deals involving very small or very large investment sums, and for less experienced venture capitalists and lead investors, spatial proximity is particularly important. The results suggest that even in economies with a dense infrastructure such as Germany spatial proximity between investor and investee impacts the likelihood of an investment. |
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Keywords: | Venture capital High growth venture Spatial proximity Entrepreneurial finance |
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