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Financing High-Tech Growth: The Role of Banks and Venture Capitalists

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Abstract

Using a data set of the firms listed on the Neuer Markt in Germany, we demonstrate that venture-backed firms differ from firms with other financial resources, especially debt. Thus, the results of this study support the hypothesis that small and innovative firms are more likely to be financed by venture capitalists rather than banks. We also provide evidence that the presence of venture capitalists enhance the growth rates of firms positively.

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Authors and Affiliations

  1. Entrepreneurship, Growth, and Public Policy Group, Max-Planck Institute for Research into Economic Systems, Kahlaische Straße 10, D-07745, Jena, Germany

    David B. Audretsch (Director, Professor at the School of Public and Environmental Affairs) & Erik E. Lehmann

  2. Indiana University, Bloomington, USA

    David B. Audretsch (Director, Professor at the School of Public and Environmental Affairs)

  3. CEPR, London, UK

    David B. Audretsch (Director, Professor at the School of Public and Environmental Affairs)

  4. Department of Economics, University of Konstanz, Box D-144, 78457, Konstanz, Germany

    Erik E. Lehmann

Authors
  1. David B. Audretsch
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  2. Erik E. Lehmann
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Correspondence to David B. Audretsch.

Additional information

We are grateful to Stephen Bond, Peter Welzel, Mark Wahrenburg, Peter Witt, and two anonymous referees for helpful comments and suggestions. The paper also benefited from presentations at the European Meeting of the Econometric Society 2003 (Stockholm), the CEPR conference on Entrepreneurship, Financial Markets and Innovation (2003, Barcelona), and the German Association of Business Administration (2003, Frankfurt). Financial support by the German Research Foundation (DFG) through the research group #FOR 454 “Heterogenous Labor”. “Normative and Positive Aspects” is gratefully acknowledged.

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Audretsch, D.B., Lehmann, E.E. Financing High-Tech Growth: The Role of Banks and Venture Capitalists. Schmalenbach Bus Rev 56, 340–357 (2004). https://doi.org/10.1007/BF03396700

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