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Investment strategies of cross-border venture capital investors

David Devigne (UGent) and Sophie Manigart (UGent)
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Abstract
Venture capital (VC) firms investing abroad use several strategies to mitigate liabilities of foreignness (LOF). Analyzing 1770 VC investments in young technology based companies, of which 20% by cross-border VC firms and 7% by their local branches, we confirm that cross-border VC firms invest in companies with lower information asymmetries. This effect disappears when controlling for co-investor characteristics. Cross-border VC firms have a higher probability to invest with local investors, larger investment syndicates and more experienced investors. When investing through a local branch, investors exhibit the same investment behavior as domestic VC firms. We thereby show that local co-investors or establishing a local presence mitigate LOF and enable cross-border investors to invest in the same companies as domestic VC firms.

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MLA
Devigne, David, and Sophie Manigart. “Investment Strategies of Cross-Border Venture Capital Investors.” Frontiers of Entrepreneurship Research, vol. 33, no. 2, Babson, 2013.
APA
Devigne, D., & Manigart, S. (2013). Investment strategies of cross-border venture capital investors. Frontiers of Entrepreneurship Research, 33(2). Babson.
Chicago author-date
Devigne, David, and Sophie Manigart. 2013. “Investment Strategies of Cross-Border Venture Capital Investors.” In Frontiers of Entrepreneurship Research. Vol. 33. Babson.
Chicago author-date (all authors)
Devigne, David, and Sophie Manigart. 2013. “Investment Strategies of Cross-Border Venture Capital Investors.” In Frontiers of Entrepreneurship Research. Vol. 33. Babson.
Vancouver
1.
Devigne D, Manigart S. Investment strategies of cross-border venture capital investors. In: Frontiers of Entrepreneurship Research. Babson; 2013.
IEEE
[1]
D. Devigne and S. Manigart, “Investment strategies of cross-border venture capital investors,” in Frontiers of Entrepreneurship Research, Ecully, France, 2013, vol. 33, no. 2.
@inproceedings{5804890,
  abstract     = {{Venture capital (VC) firms investing abroad use several strategies to mitigate liabilities of foreignness (LOF). Analyzing 1770 VC investments in young technology based companies, of which 20% by cross-border VC firms and 7% by their local branches, we confirm that cross-border VC firms invest in companies with lower information asymmetries. This effect disappears when controlling for co-investor characteristics. Cross-border VC firms have a higher probability to invest with local investors, larger investment syndicates and more experienced investors. When investing through a local branch, investors exhibit the same investment behavior as domestic VC firms. We thereby show that local co-investors or establishing a local presence mitigate LOF and enable cross-border investors to invest in the same companies as domestic VC firms.}},
  articleno    = {{1}},
  author       = {{Devigne, David and Manigart, Sophie}},
  booktitle    = {{Frontiers of Entrepreneurship Research}},
  isbn         = {{0910897387}},
  language     = {{eng}},
  location     = {{Ecully, France}},
  number       = {{2}},
  pages        = {{15}},
  publisher    = {{Babson}},
  title        = {{Investment strategies of cross-border venture capital investors}},
  volume       = {{33}},
  year         = {{2013}},
}