Skip to main content

LUP Student Papers

LUND UNIVERSITY LIBRARIES

Venturing Abroad: The liability of foreignness on European venture capital investment returns

Claesson, Alexander LU ; Lee Alm, Daniel LU and Boras, Sara LU (2024) IBUH19 20241
Department of Business Administration
Abstract
This study aims to investigate whether cultural, institutional, and geographic distances between European lead investors and startups affect returns to Venture Capital (VC) investments. A cross-sectional analysis of 332 European VC investments initiated in 2015 and 2016 within the European Union (EU), European Economic Area (EEA) and European Free Trade Association (EFTA) was conducted. Four different hypotheses were formulated and tested, of which two were supported. The results of this thesis finds that domestic investments have a higher mean return as compared to foreign investments. Solely cultural distance was found to be significant, with a negative effect on investment return. Decades of integration efforts between EU, EEA and EFTA... (More)
This study aims to investigate whether cultural, institutional, and geographic distances between European lead investors and startups affect returns to Venture Capital (VC) investments. A cross-sectional analysis of 332 European VC investments initiated in 2015 and 2016 within the European Union (EU), European Economic Area (EEA) and European Free Trade Association (EFTA) was conducted. Four different hypotheses were formulated and tested, of which two were supported. The results of this thesis finds that domestic investments have a higher mean return as compared to foreign investments. Solely cultural distance was found to be significant, with a negative effect on investment return. Decades of integration efforts between EU, EEA and EFTA countries have been discussed as a potential factor contributing to the insignificance of institutional and geographic distances on investment return. However, the private nature of the venture capital industry has presented methodological challenges in this thesis, resulting in a non-random sampling approach. Therefore, caution should be taken in the generalisation of results to the broader population of VC investments. Future research ought to explore the possibility of obtaining a larger sample size to be able to make statistical inferences with high certainty on the relationships between the variables studied. (Less)
Please use this url to cite or link to this publication:
author
Claesson, Alexander LU ; Lee Alm, Daniel LU and Boras, Sara LU
supervisor
organization
course
IBUH19 20241
year
type
M2 - Bachelor Degree
subject
keywords
venture capital, cross-border, cultural distance, institutional distance, geographic distance, lead investor
language
English
id
9163152
date added to LUP
2024-06-19 16:57:41
date last changed
2024-06-19 16:57:41
@misc{9163152,
  abstract     = {{This study aims to investigate whether cultural, institutional, and geographic distances between European lead investors and startups affect returns to Venture Capital (VC) investments. A cross-sectional analysis of 332 European VC investments initiated in 2015 and 2016 within the European Union (EU), European Economic Area (EEA) and European Free Trade Association (EFTA) was conducted. Four different hypotheses were formulated and tested, of which two were supported. The results of this thesis finds that domestic investments have a higher mean return as compared to foreign investments. Solely cultural distance was found to be significant, with a negative effect on investment return. Decades of integration efforts between EU, EEA and EFTA countries have been discussed as a potential factor contributing to the insignificance of institutional and geographic distances on investment return. However, the private nature of the venture capital industry has presented methodological challenges in this thesis, resulting in a non-random sampling approach. Therefore, caution should be taken in the generalisation of results to the broader population of VC investments. Future research ought to explore the possibility of obtaining a larger sample size to be able to make statistical inferences with high certainty on the relationships between the variables studied.}},
  author       = {{Claesson, Alexander and Lee Alm, Daniel and Boras, Sara}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Venturing Abroad: The liability of foreignness on European venture capital investment returns}},
  year         = {{2024}},
}