2008/23 LEM Working Paper Series

Financing Technology-Based Small Firms in Europe: A review of the empirical evidence.

Valerie Revest, Sandro Sapio
Technology-based small firms, capital structure, venture capital, high-tech stock markets, public support.

  JEL Classifications
G24, G28, G32, M13

This paper reviews the empirical evidence of the financial sources used by technology-based small firms (TBSFs) in Europe. We shed light on cross-country differences and similarities in the capital structures of TBSFs, in the organization and dynamics of the venture capital industries and high-tech stock markets, as well as in policy-making. We focus on the main European economies, i.e. France, Germany, Italy and the UK. The evidence of a pecking order among capital sources, the rather conservative investment behaviors of venture capital funds in all countries, and the differential performances of hi-tech stock markets cannot be accounted for by the market-based vs. bank-based taxonomy widely used in the research on financial systems.

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