Industry Concentration and Venture Capital Flows around the World

This paper explores the relationship between the international venture capital (VC) activity and industry concentration levels in the countries of investors (origins) and those of target companies (destinations). With the international sample of VC transactions covering 65 industries and 67 countries during 1980-2016, we find a significant positive association between the flow of cross-border VC investments and the difference in industrial concentration levels between the origin and destination countries. This result is robust to (i) the inclusion of various control variables identified by the extant literature, (ii) inclusion/exclusion of the US-destined investments, and (iii) alternative estimation methods.