Determinants of Venture Capital Investments : A panel data analysis across regions in the United Kingdom

Venture Capital is an important theme in economic research as a growing intermediate in the financing of new or growing young firms. In Europe, it is the United Kingdom that is the leading country with the highest amount of venture capital activity. However, there is a wide spatial distribution of venture capital across the regions of the United Kingdom where London and the South East alone pulled nearly 60% of venture capital in 2013. This paper focuses on a cross-regional study with the selected regions of the United Kingdom: Scotland, England, Wales, and Northern Ireland. The purpose to investigate the relationship between economic growth, research & development expenditure, and population density with total venture capital investments during the time period 2006 – 2016. The aim is to contribute to existing literature on determinants of venture capital with evidence from the United Kingdom. Using a fixed effect model, we can establish a positive relationship between population density and total venture capital invested. Economic growth and gross expenditure on research & development did not yield any significant result