High-technology VCs: a distinct species on the investment market

Abstract

Over the last decades, venture capital investment management has considerably become interested in high-tech investing. Despite this higher interest, no clear analysis exists of who these high-tech VCs are, and how they differ from traditional VCs. Studying selection behaviour of VCs using a conjoint methodology, we identified 28 high-tech investors in a unique sample of 68 European early stage investors. These VCs emphasize high-tech related criteria during the selection process. A further analysis of this group of high-tech investors compared to traditional investors showed that high-tech VCs are to a larger extent publicly funded than traditional VCs. Besides, they tend to be more prominent in biotech investing. We found no indication that specific or general human capital with respect to high-tech investing affects selection behaviour. This research has important implications for public policy, aiming at resolving the market failure for high-tech investments, high-tech entrepreneurs looking for VC funding, and VC funds.