In this paper a model of the spatial development of the American venture capital industry is provided. The investment preferences for both publicly and privately owned venture capital firms for the period 1970–85 are examined in light of this model. A median polish analysis of the investment preferences, for firms located in the sixteen largest venture capital centers, reveals a high level of regional parochialism in investment. Differences in risk aversion and industry choice are also found both by city type and by firm type. Implications for local development are discussed.
Get full access to this article
View all access options for this article.
References
1.
CRA, 1976An Analysis of Venture Capital Market ImperfectionsCharles River Associates, Cambridge, MA, for the National Bureau of Standards, Experimental Technology Improvement Program; available from CRA, 133 Federal Street, Boston, MA 02110, USA
2.
DavisBM, 1986, “Role of venture capital in the economic renaissance of an area”, in Entrepreneurship, Intrapreneurship, and Venture Capital Ed. HisrichRD, (Lexington Books, Lexington, MA) pp 107–118
3.
DominguezJR, 1974Venture Capital (Lexington Books, Lexington, MA)
4.
DominguezJR, 1976Capital Flows in Minority Areas (D C Heath, Lexington, MA)
5.
DJ–I, 1986Dow Jones–Irwin Business and Investment Almanac (Dow Jones Company, New York, NY)
6.
FloridaRLKenneyM, 1987, “Venture capital, high technology and regional development”Regional Studies22(1) 33–48
7.
HambrechtWR, 1984, “Venture capital and the growth of Silicon Valley”California Management Review26(2) 74–84
8.
HobanJP, 1976Characteristics of Venture Capital Investments PhD dissertation, School of Business Administration, University of Utah, Salt Lake City, UT 84602, USA
9.
HooperDWalkerD, 1983, “Innovative and cooperative entrepreneurship: Towards a new thrust in industrial development policy”, in Spatial Analysis, Industry and the Industrial Environment Eds HamiltonFEILingeGJR, (John Wiley, New York) Volume 3, pp 217–232
10.
HuntsmanBHobanJP, 1980, “Investment in new enterprise: Some empirical observations on risk, return, and market structure”Financial Management Summer, pages 44–51
11.
JohnsonJS, 1976Johnson's Directory of Risk Capital for Small BusinessBusiness Research and Service Institute, College of Business, Western Michigan University, Kalamazoo, MI 49008, USA
12.
KieschnickM, 1979Venture Capital and Urban DevelopmentCouncil of State Planning Agencies, Hall of the States, 444 North Capitol Street, Washington, DC 20001, USA
13.
KieschnickMDanielsB, 1978Preliminary Research on Capital Markets and Economic DevelopmentNational Rural Center and Opportunity Funding Corporation, Washington, DC
14.
KryanowskiLGiraldeauR, 1977, “Venture capital management: A survey of attitudes toward selection criteria”American Journal of Small Business2(1) 29–37
15.
LeinbachTRAmrheinC, 1987, “A geography of the venture capital industry”The Professional Geographer39146–158
16.
LilesPR, 1974, “Venture capital: What it is and how to raise it”, in New Business Ventures and the Entrepreneur (Richard D Irwin, Homewood, IL) pp 461–494
17.
McNaughtonRBGreenMB, 1987, “Partitioning U.S. venture capital flows: A weighted graphic theoretic blocking analysis”East Lakes Geographer2221–32
18.
OakeyRP, 1984, “Innovation and regional growth in small high technology firms: Evidence from Britain and the U.S.A.”Regional Studies18237–251
19.
OTA, 1984Technology, Innovation, and Regional Economic DevelopmentUS Congress Office of Technology Assessment, Washington, DC
20.
PenceCC, 1982How Venture Capitalists Make Investment Decisions (University of Michigan Press, Ann Arbor, MI)
21.
PetersonR, 1977Small Business Building and Balanced Economy (Porcepic Press, Toronto, Ont)
22.
PoindexterJB, 1976The Efficiency of Financial Markets: The Venture Capital Case PhD dissertation, Graduate School of Business Administration, New York University, Washington Square, New York, NY
23.
PrattSE, 1977 (4th edition) Guide to Venture Capital (Capital Publishing Corporation, Wesley Hills, MA)
24.
PrattSE, 1981 (5th edition) Guide to Venture Capital (Capital Publishing Corporation, Wesley Hills, MA)
25.
PrattSE, 1983 (6th edition) Guide to Venture Capital (Capital Publishing Corporation, Wesley Hills, MA)
26.
PredAR, 1977City Systems in Advanced Economies (Halstead Press, New York)
27.
RubelSM, 1970 (1st edition) Guide to Venture Capital (Capital Publishing Corporation, Wesley Hills, MA)
28.
RubelSM, 1972 (2nd edition) Guide to Venture Capital (Capital Publishing Corporation, Wesley Hills, MA)
29.
RubelSM, 1974 (3rd edition) Guide to Venture Capital (Capital Publishing Corporation, Wesley Hills, MA)
30.
SilverAD, 1985Venture Capital: The Complete Guide for Investors (John Wiley, New York)
31.
SinclairLW, 1971Venture Capital (Technimetrics, New York, NY)
32.
StevensonHHSahlmanWA, 1986, “Importance of entrepreneurship in economic development”, in Entrepreneurship, Intrapreneurship, and Venture Capital Ed. HisrichRD, (Lexington Books, Lexington, MA) pp 3–26
33.
StoreyD, 1980Job Generation and Small Firms Policy in BritainCentre of Environmental Studies, 62 Chandos Place, London, WC2N 4HN, England
34.
SyllaR, 1980, “Small-business banking in the United States”, in Small Business in American Life Ed. BruckeySW, (Columbia University Press, New York) pp 240–262
35.
TribusM, 1970, “Panel on government and new business proceedings” Venture Capital and Management Management Seminar, May 28–29, Boston College, Chestnut Hill, MA 02167, USA)
36.
•TukeyJW, 1949, “One degree of freedom for non-additivity”Biometrics5232–242
37.
TukeyJW, 1977Exploratory Data Analysis (Addison-Wesley, Reading, MA)
38.
•VellemanPFHoaglinDC, 1981Applications, Basics, and Computing of Exploratory Data Analysis (Duxbury Press, Boston, MA)
39.
• Venture Capital Journal1983, “SBICs after 25 years”, October, page 6
40.
VGIVC, 1985Ventures's Guide to International Venture Capital (Simon and Schuster, New York)
41.
WellsWA, 1974Venture Capital Decision Making PhD dissertation, Carnegie Institute of Technology, Carnegie-Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213, USA
42.
WetzelWSeymourC, 1981Informal Risk Capital in New EnglandThe Whittlemore School of Business and Economics, University of New Hampshire, Durham, NH 03824, USA
43.
WilsonLW, 1985The New Venturers (Addison-Wesley, Reading, MA)
