This study analyzes venture capital financing provided to start-ups; particular attention is devoted to Italy, where the average size of financing rounds is modest as compared with other countries. In the analysis, machine learning techniques are used to exploit the rich information contained in thousands of variables about the firms, the venture capital funds and their countries of incorporation.
Firm characteristics (for example, their industrial sector) are an important determinant of the cross-country heterogeneity in funding size. Among country characteristics, the degree of development of the venture capital industry does not have significant effects; other characteristics, in particular the ease of starting up and conducting a business, have a strong impact. In Italy, the low average level of funding is explained in large part by country characteristics while firm characteristics have a negative but small impact.
Published in 2022 in: Empirical Economics, v. 62, 3, pp. 991-1012
