Venture Capital Investors, Capital Markets, Valuation and Information: US, Europe and Asia
Wright, Mike Lockett, Andy Pruthi, Sarika Manigart, Sophie Sapienza, Harry Desbrieres, Philippe Hommel, Ulrich
Wright, Mike
Lockett, Andy
Pruthi, Sarika
Manigart, Sophie
Sapienza, Harry
Desbrieres, Philippe
Hommel, Ulrich
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Publication Type
Journal article
Editor
Supervisor
Publication Year
2004-12
Journal
Journal of International Entrepreneurship
Book
Publication Volume
2
Publication Issue
4
Publication Begin page
305
Publication End page
326
Publication Number of pages
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Abstract
This paper uses a large multi-country sample of venture capital firms to compare the approaches to investee valuation and sources of information used by venture capital investors in English, French and German legal systems as well as geographical regions. Different legal systems are significantly associated with the valuation mechanism used. In particular, compared to English-based Common Law systems, VC firms operating in a Germanic legal system are significantly more likely to use DCF based measures and significantly less likely to use PE comparators. This latter result is also the case for VC firms operating in a French legal system who are also significantly more likely to adopt historic cost valuation methods. VC firms in Europe and Asia are significantly less likely than US VC firms to make use of liquidation value methods but significantly more likely to use PE comparators. European firms are significantly less likely to adopt DCF methods compared to US VC firms. VC firms operating under a Germanic legal system are less likely to utilise information from the financial press but significantly more likely to use interviews with entrepreneurs. VC firms operating under a French legal system are more likely to utilise interviews with company personnel as well as sales and marketing information. VC firms in Europe and Asia are significantly more likely than US VC firms to use financial press. VC firms in Asia are significantly less likely to make use of interviews with entrepreneurs or business plan data. VC firms in Europe are significantly more likely to utilise sales and marketing information.
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Keywords
3502 Banking, Finance and Investment, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour