Study on venture capital investments flows in the Journal of Business Venturing
The paper 'When venture capital comes to town: Local ecosystem effects beyond funded ventures' by research fellow Steven Poelhekke (Vrije Universiteit Amsterdam) and alumnus Benjamin Wache (CPB Netherlands Bureau for Economic Policy Analysis) has been published in the Journal of Business Venturing (May 2026).
Abstract
When venture capital (VC) investment flows into a local economy, does it yield economic activity beyond the receiving ventures? While a large literature studies the effect of VC investments on venture-level activity, its consequences for broader economic activity are less well understood. We study the effect of VC investment flows on destination county employment, wages, and venture creation, using a novel instrument based on the ‘social connectedness’ of counties to major non-local sources of VC investment. Using detailed data on investor-to-venture VC flows, we find substantial positive effects: using instrumental-variable estimates, each million dollars invested into a county yields approximately one new venture, 41 jobs, and seven million dollars in payroll. We also document positive spillovers across industries, particularly toward those supplying VC-backed ventures—thereby contributing to the resource munificence of the local economy and its entrepreneurial ecosystem.
Article citation
Steven Poelhekke and Benjamin Wache, 'When venture capital comes to town: Local ecosystem effects beyond funded ventures,' Journal of Business Venturing, Volume 41, Issue 3, doi.org/10.1016/j.jbusvent.2026.106588.