Venture capital and the financial crisis: an empirical study across industries and countries

Abstract

This study analyzes the effect of the 2008 financial crisis on the venture capital market. We show that the crisis is associated with a decrease in the number of initial funding rounds as well as with a decrease in the amount of funds raised in later funding rounds. The effects of the crisis differed across industries and were stronger in the US than in other countries. We suggest that the crisis has led to a severe ‘funding gap’ in the financing of technological development and innovation