The Internationalisation of Venture Capital Activity in OECD Countries

Venture capital has grown significantly in most OECD countries during the 1990s, and is increasingly associated with improved firm performance in terms of survival rates, innovation and growth. This paper compares venture capital activity across OECD countries by taking into account international venture capital flows. Most comparisons are based on data concerning investments made by venture capital funds located in a given country ("country of management"). In contrast, this paper also uses a more policy relevant measure that examines data on investments made in a country ("country of destination"), by subtracting cross-border outflows and including inflows. For countries such as Ireland, Denmark and Switzerland, inflows plus outflows largely outweigh investments by domestic venture capital funds. Some countries, especially Ireland and Denmark, have significant net inflows of venture capital, while net outflows appear for the United Kingdom and Switzerland. While such cross-border ...