German business ventures - entrepreneurs, success factors, and financing

During recent years, German business ventures have used venture capital financing to a steadily increasing extent. Yet, relatively little research has been conducted on the relationship between venture companies and VC investors in Germany. In particular, the initial process that gives rise to VC investments is, for the most part, not covered. Furthermore, little evidence is available on the acquisition, the use of, and the benefit of VC financing. Based on an unparalleled survey among more than 300 German business ventures, this chapter addresses central questions from the investors' as well as the business ventures' perspectives. It studies the relationship between the entrepreneurs' characteristics, the ventures' characteristics, and the ventures' success. The results indicate that the degree of innovation of the venture is a key determinant of success. A look at the personal background of the entrepreneurs reveals that they are in their late 30s, on average, and have reasonable professional experience. Interestingly, financial intermediaries, including banks as well as consultants, so far do not seem to play a major role in the matching of VC demand and supply in Germany.