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.

Joacim Tåg

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Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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