Practices of European and American venture capitalists: Homogeneity and heterogeneity at work

Abstract

Driven by diverse institutional contexts, regional venture capital (VC) markets have expanded unevenly over the past decades, with the U.S. market remaining the global leader. While much attention has been devoted to understanding institutional drivers of VC activity, scholars are only beginning to understand whether and how institutions influence how VCs make investment decisions, especially in non- U.S. markets. Addressing this theoretically and practically relevant shortcoming, we provide new insights by comprehensively surveying 611 independent VC managers in Continental Europe. Comparing European VCs’ practices with those of their U.S. counterparts, we unveil homogeneity but also significant heterogeneity, particularly in investment selection, valuation methods, and perceived drivers of investment performance. Our findings underscore the central role of institutions in shaping VC practices, offering important insights into this less-explored dimension of the global VC landscape, with implications for investors, entrepreneurs, and policymakers.