Sources of funds and investment activities of venture capital funds: Evidence from Germany, Israel, Japan and the United Kingdom

Colin Mayer, Koen Schoors*, Yishay Yafeh

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

152 Scopus citations


We compare the investment activities and sources of finance of venture capital (VC) funds in Germany, Israel, Japan and the United Kingdom. VC investments differ across countries in terms of their stage, sector and geographical focus. Sources of VC funds also differ across countries; for example, banks are particularly important in Germany and Japan, corporations in Israel, and pension funds in the United Kingdom. Although the differences in investments are related to funding sources - for example, bank and pension fund-backed VCs invest in later stage activities than individual and corporate backed funds - a large proportion of variation within as well as between countries is unrelated to sources of finance. Moreover, differences in the relation between funding source and VC activity are unrelated to the country's financial systems. We conclude that neither financial systems nor sources of finance are the main explanations for the pronounced differences in VC activities.

Original languageAmerican English
Pages (from-to)586-608
Number of pages23
JournalJournal of Corporate Finance
Issue number3
StatePublished - Jun 2005

Bibliographical note

Funding Information:
We thank Hedva Ber, Marco Da Rin, Michel Habib, Thomas Hellman, Eugene Kandel, Ken Kim, Jan-Peter Krahnen, Saul Lach, Sophie Manigart, Alan Morrison, Seki Obata, Kristian Rydqvist, Juro Teranishi, Naoyuki Yoshino, the editor, David Denis, and an anonymous referee of this journal for helpful comments and suggestions. We have also benefited from comments by seminar participants at the Bergen School of Management, the European Central Bank, the Oslo School of Management, the University of Oxford and Waseda University, and from participants at the CEPR Conference “Understanding Financial Architecture” (Madrid), the IMF/Hitotsubashi Conference on “Designing Financial Systems in East Asia and Japan” (Tokyo), the Mannheim Conference on “Industrial Economics and Input Markets,” the NBER 2002 Japanese Economy Workshop (Tokyo) and the Yale Conference on Entrepreneurship. Financial support from the European Commission Research Training Network “Understanding Financial Architecture: Legal and Political Frameworks and Economic Efficiency” is gratefully acknowledged. This research project was initiated while Koen Schoors and Yishay Yafeh were visiting fellows at the University of Oxford (Saïd Business School; and St. Antony's College and the Nissan Institute, respectively) whose hospitality and financial support are gratefully acknowledged.


  • Investment stage
  • Venture capital financing


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