Working Paper No. 1272

Foreign Investors and Domestic Company Growth: Evidence from US Venture Capital Investments in Sweden

Published: May 12, 2019Pages: 40Keywords: Domestic; Employment; Foreign; International; Venture CapitalJEL-codes: G24; J21; F16; F30; F65; F66

Foreign Investors and Domestic Company Growth: Evidence from US Venture Capital Investments in Sweden Thomas Hellmann, Alexander Montag and Joacim Tåg


Do foreign venture capitalists help the domestic economy, or hamper it by slowing down growth, potentially moving economic activity away? This paper addresses this long-standing policy question by examining the differential effects of US venture capital investments on the growth of Swedish start-up companies. It finds that US venture capital results in more employment, not less.

These findings continue to hold after controlling for endogenous selection effects. US investments are also accompanied by increases in local employment and start-up rates. The paper also examines effect on wages, sales, earnings, foreign subsidiaries, subsequent funding rounds, and exits. Overall there is no evidence that US venture capital investments hamper the domestic growth of Swedish companies.

Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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