ABSTRACT
This chapter summarizes a two-year research project on venture capital and economic development. The research addressed three questions. First, where is venture capital invested? Second, why is venture capital invested where it is? Third, what is the effect of venture capital on economic development—under what conditions does venture capital enhance the economic development potentials of particular areas? In order to answer these questions, the research developed a microlevel data base on venture capital investment. The conventional wisdom assumes that the supply of venture capital is an important determinant of the ability of regions and metropolitan areas to generate high-technology economic development. The research literature on the economic development implications of venture capital is far less developed. The majority of this research focuses on the question of venture capital supply. The literature on venture capital investment is less extensive. Leinbach and Amrhein used aggregate data on venture capital investments for one year to analyze regional variations in venture capital investment.
