The importance of the venture capital industry in the major European countries is examined, and funding and investment patterns are investigated. The data are mainly, but not solely, taken from the yearly statistics of the European Venture Capital Association and cover the period 1984-1989. It is shown that nearly half (44%) of the European investments are made in the expansion stage, management buyouts account for another 36%. Only 14% is invested in seed or start-up companies, much less than the 30% in the US. Half of the venture capital investments in the UK are buyouts. The highest start-up investment activity takes place in Austria and Spain. Cluster analyses indicate that characteristics of mature industries are: 1. a bigger size, relative to the gross national product of the country, 2. the presence of pension funds and insurance companies as investors in the industry, 3. the syndication of the deals, and 4. the absence of the government as an investor.

Using 2 complementary theoretical perspectives, this paper develops hypotheses regarding the determinants of the return required by venture capitalists and tests this on a sample of over 200 venture capital companies (VCCs) located in 5 countries. It finds that early-stage specialists required a significantly higher return than other VCCs when investing in later-stage ventures. It also finds that acquisition/buyout specialists require a significantly lower return than other VCCs when investing in expansion companies.

The results of an explorative study on the financing of 18 high technology Belgian startups are reported. On a counts basis, the most important sources of financing at the startup are the entrepreneurs and the banks, but the sources that provide the largest amounts of funds are the venture capital companies and private investors. Private investors and venture capitalists have a complimentary role, with the former investing mostly at the startup and the latter financing the early growth. The role of the government, universities and other companies is limited.