The internationalization of venture capital

Joshua Aizenman (Department of Economics, UCSC, Santa Cruz, California, USA)
Jake Kendall (The Gates Foundation, Seattle, Washington, USA)

Journal of Economic Studies

ISSN: 0144-3585

Publication date: 21 September 2012



The purpose of this paper is to investigate the factors which affect the market for international venture capital (VC) investments, relying on comprehensive deal‐level data sources, covering three decades and about 100 countries.


A gravity analysis indicates that distance, common language, and colonial ties may have been significant factors in directing these flows.


The paper documents major shifts in the nature of international flows. The presence of high‐end human capital, a better business environment, military expenditure, and deeper financial markets are important local factors that appear to attract international VC. There is some evidence indicating network effects and/or fixed costs of entry may be at work. France, Israel, Canada, India and China were consistent net importers of VC deals, with China emerging as the largest net importer of VC.


The paper investigates the increasing internationalization of VC investments in recent years and assesses the factors which determine the destination of cross‐border VC investment flows.



Aizenman, J. and Kendall, J. (2012), "The internationalization of venture capital", Journal of Economic Studies, Vol. 39 No. 5, pp. 488-511.

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Copyright © 2012, Emerald Group Publishing Limited

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