Public policy and the creation of active venture capital markets

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Acknowledgements

I owe many thanks to Colin Mason, Sofia Johan and Yong Li for helpful comments on this paper.

Notes

1. Bankruptcy law is not considered in Da Rin, Nicodano, and Sembenelli (2006) because bankruptcy law differences across countries and over time were not readily available from extant sources (they were coded by Armour and Cumming 2006, 2008).

2. The reference provided in Lerner's 2009 book in endnote 16 page 210 is: ‘Government sponsored venture capital in Canada: Effects on value creation, competition and innovation’, Working Paper, University of British Columbia, 2008. The updated reference is Brander, Egan, and Hellmann (2010), which was published pursuant to a conference hosted by professors Lerner and Schoar in February 2008.

3. The proportion of cross-border venture capital investment from Canada to the United States for all types of Canadian investors and all types of investees (not just ‘venture capital’ deals as reported in Figure 4) looks extremely similar and as such is not presented for reasons of brevity.

4. Further, many limited partnership funds have covenants that limit the ability to invest in foreign securities; see Cumming and Johan (2009) for data on this topic. As well, it would be hard and less likely for a Canadian venture capital fund to raise money based on US investment objectives since institutional investors themselves could invest in US-based funds that are closer to the target investees. I owe thanks to Colin Mason for these helpful comments.

5. Likewise, IPO markets can have a significant role in shaping early versus late stage venture capital investments; see Cumming, Fleming, and Schwienbacher (2005); for work on the same topic, see also Gompers et al. (2008).

6. For comparable evidence that was distributed on www.ssrn.com in 2004 from over 3800 venture capital transactions in 39 countries, see Cumming, Schmidt, and Walz (2010).

7. For a more complete discussion of these alternative policy instruments, see Djankov et al. (2002), Audretsch (2007a, 2007b), Jääskeläinen, Maula, and Murray (2007); Keuschnigg and Nielsen (2001, 2003a, 2003b, 2004a, 2004b, 2004c), Klapper, Laeven, and Rajan (2006), Cumming and Johan (2009, 2010), Chavis, Klapper, and Love (2009), among others.