Alexander P. Groh, Heinrich Liechtenstein () and Karsten Lieser
Alexander P. Groh: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Heinrich Liechtenstein: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Karsten Lieser: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Abstract: We calculate composite indexes to compare the attractiveness of 25 European countries for institutional investments into the Venture Capital and Private Equity asset class. To achieve this we use 42 different criteria and propose an aggregation structure that allows for benchmarking on more granular levels. The United Kingdom leads our ranking, followed by Ireland, Denmark, Sweden and Norway. While Germany is slightly above the average European attractiveness level, the scores for France, Italy, Spain, and Greece are rather disappointing. Our analyses reveal that while the United Kingdom is similar to the other European countries with respect to many criteria, there are two major differences which ultimately affect its attractiveness: its investor protection and corporate governance rules; and the size and liquidity of its capital market. The state of the capital market is likewise a proxy for the professionalism of the financial community, deal flow and exit opportunities. We determine a reasonable correlation between our attractiveness index scores and actual Venture Capital and Private Equity fundraising activities and prove the robustness of our calculations. Our findings across all the European countries suggest that while investor protection and capital markets are in fact very important determinants of attractiveness, there are numerous other criteria to consider.
50 pages, November 7, 2008
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