Publication

This paper examines driving forces of venture capital activity for western European countries. The author looks at the liquidity of stock markets, human capital endowment and labor market rigidities as potential driving forces. She shows that these factors do not affect expansion stage investments used as a broader definition of venture capital, while they positively affect early stage investments used as a narrow definition. She concludes that liquid stock markets play an important role for the development of venture capital markets but also that they are not the only factor that drives venture capital activity.