ABSTRACT
European venture capital (VC) funds have historically underperformed their US counterparts, although returns are now improving. This has resulted in reduced investment into European VC by the traditional institutional investors and reliance on government agencies to support funds. Previous studies into the performance gap have not fully explained the reasons for the difference in performance between European and US VC funds. This study is unique in that it reviews the entire investment process from sourcing deals to exiting deals specifically contrasting Europe and the US in terms of the variables pertaining to the investment process and the impact on the fund performance gap. The qualitative research that is the focus of this study into factors that could potentially be responsible for the performance differential is introduced. Factors can be structural in terms of the size and stage and sector focus of VC firms, operational in terms of the investment practices of VC firms or pertaining to the wider environments in which the firms and funds operate. The research questions into the performance gap are outlined and the contribution of the research to scholarship and practice introduced. If European VC firms adopt more of the best practices of US VC firms, then performance of European venture could be further improved.
