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Publications
  • January 2010
  • Article
  • Journal of Urban Economics

Buy Local? The Geography of Successful Venture Capital Expansion

By: Henry Chen, Paul A. Gompers, Anna Kovner and Josh Lerner
  • Format:Print
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Abstract

We document geographic concentration by both venture capital firms and venture capital-financed companies in three metropolitan areas: San Francisco, Boston, and New York. We find that venture capital firms locate in regions with high success rates of venture capital-backed investments. Geography is also significantly related to outcomes. Venture capital firms based in locales that are venture capital centers outperform, regardless of the stage of the investment. This outperformance arises from outsized performance outside of the venture capital firms's office locations, including in peripheral locations. If the goal of state and local policy makers is to encourage venture capital investment, outperformance of non-local investments suggests that policy makers might want to mitigate costs associated with established venture capitalists investing in their geographies rather than encouraging the establishment of new venture capital firms.

Keywords

Venture Capital; Expansion; Success; Capital; Geographic Location; Business Units; Corporate Accountability; Business Offices; Goals and Objectives; Mission and Purpose; Investment Funds; Corporate Governance; Boston; New York (state, US); San Francisco

Citation

Chen, Henry, Paul A. Gompers, Anna Kovner, and Josh Lerner. "Buy Local? The Geography of Successful Venture Capital Expansion." Journal of Urban Economics 67, no. 1 (January 2010): 90–110.
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About The Authors

Paul A. Gompers

Finance
→More Publications

Josh Lerner

Entrepreneurial Management
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More from the Authors

    • July 2022
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    • June 2022
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    By: Josh Lerner and Amit Seru
    • April 2022
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More from the Authors
  • Private Equity and COVID-19 By: Paul A. Gompers, Steven N. Kaplan and Vladimir Mukharlyamov
  • The Use and Misuse of Patent Data: Issues for Finance and Beyond By: Josh Lerner and Amit Seru
  • Shanghai Pudong Science and Technology Investment Co., Ltd.: December 2014 By: Josh Lerner
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