The following definitions are derived from the online help of VentureSource. 1023

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1 Appendix A Definitions from VentureSource The following definitions are derived from the online help of VentureSource A.1 Venture Financing Round Types Seed Round: Seed rounds are initial rounds invested in companies at very early stages of development, typically with the founders and product developers such as engineers or molecular biologists on board, but without a complete management team in place. Most seed rounds do not exceed $2.5 million in amount raised. First Round, Second Round: This ordinal nomenclature is used to describe most venture rounds. Companies often refer to financing rounds as first, second, third, etc. even though the legal term for the transaction as stated in closing documents and amendments to the documents of incorporation may refer to them as series A preferred, series B common, etc. Later Stage: VentureSource classifies all equity rounds subsequent to the second round as later rounds. Restart: A restart round requires a judgment by the Research team unless the company itself characterizes the financing round as restart funding. Generally, a restart round is characterized by a significantly reduced valuation causing significant dilution, which serves to "wash out" existing investors who do not participate in the restart round. Often a restart is accompanied by a change in business direction or a dramatic shift in marketing strategy. The business status of a company that has completed a restart round is also Restart. Note: If, following a restart, a company raises subsequent rounds that it refers to as First, Second, Third, etc., the round type for those rounds will be r1st, r2nd, r3rd, etc Cf. VentureSource (2007). M. Bender, Spatial Proximity in Venture Capital Financing, DOI / , Gabler Verlag Springer Fachmedien Wiesbaden GmbH 2011

2 300 Appendix A.2 Stages of Development Startup: A startup is a business that is in a purely conceptual phase--product development has not begun. This business stage corresponds to the seed round of venture capital financing. Product Development: Companies in product development are currently developing one or more products, but have not yet begun shipping. At the development stage and beyond, a company can have received any number of venture capital rounds, from an initial venture round through the final financing round before a liquidity event. Product in Beta Test or Clinical Trials: For information technology companies, this is an intermediate period when the company is technically still in product development, but a prototype is being tested by select customers prior to market introduction. For medical therapeutics companies (e.g., medical compounds or drugs) and medical device companies, this stage signifies that the product is out of development and has progressed to human clinical trials. Shipping Product: The shipping stage indicates that at least one revenue-generating product is being shipped, although other products may still be in development or beta test. For service companies, this stage indicates that the company is providing services to a customer base and receiving revenues for those services. Profitable: The profitable stage indicates that the company is shipping products or providing services from which it derives revenues, and the company has reported that it is profitable.

3 Appendix 301 B Appendix Description of Dataset Frequency Cummulative Density 1,0 0,8 Frequency ,6 0,4 Density 50 0, Population density of new venture's district (Inhabitants/km²) 0,0 Figure B.1: Distribution of VC financing rounds in regard to the population density of the new venture s district Source: Own illustration. Table B.1: Summary statistics of original metric variables This table provides summary statistics for independent metric variables in their original untransformed form. Variable Mean Median S.D. Min. Max. Obs. Venture Venture development stage Age in years Number of employees Industry's knowledge intensity Asset intangibility R&D intensity Book/market Venture capitalist Assets under management in m Age in years Control variables VC market condition German VC fundraising (t-1) in m German VC investments in m

4 302 Appendix C Appendix Patterns in Spatial Proximity Table C.1: Correlation matrix of independent variables This table presents the correlation coefficients based on Kendall s tau between the independent variables. The sample consists of 1402 dyads of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March The number of observations might vary due to missing values. Variable Ln(venture age in years) Dummy seed stage round * Dummy first round * * Dummy later stage round 0.402* * * Ln(number of venture employees) 0.216* * * * Dummy business concept only * * * * Dummy product development/tests * * * * * * Dummy shipp.prod./profitable 0.193* * * * * * * Dummy prior exec. experience * * * * * * Dummy high asset intangibility * * * * Dummy high R&D intensity * * * * Dummy low book/market * * * * * * * Dummy East German venture 0.110* * * Dummy urban venture location 0.045* * * * * * * * * * Ln(VC assets under management in m ) * * * * * * * * * * Ln(VC age in years) 0.106* * * * * * * * * * * 17 HHI industry * * * * * * * 18 HHI stage * * * * * * * * * 19 Dummy VC with excl. fin. objectives * * * * * * Dummy corporate VC * * Dummy (quasi-)public VC * * * * * * 22 Dummy lead-investor * * * * * * * * * Investment volume per VC (m ) 0.060* * * * * * * * * * * * 24 Syndication benefit (min. tr. time) * * * * * * * * * * * 25 Syndication benefit (car tr. time) * * * * * * * * * * * 26 Syndication benefit (car distance) * * * * * * * * * * * * 27 No. of consecutive round 0.227* * * * * * * * * * * 28 Ln(German VC fundraising in m (t-1)) * * * * * * * * * * 29 Ln(German VC investments in m ) * * * * * * 30 Return of MSCI SC Germany (ltm) 0.117* * * * * * * * 31 VC's no. of offices * * * * * *

5 Appendix 303 Table C.1 cont.: Correlation matrix of independent variables Variable Ln(VC age in years) HHI industry * HHI stage * * Dummy VC with excl. fin. objectives * * * Dummy corporate VC * * * Dummy (quasi-)public VC * * * * Dummy lead-investor * * * Investment volume per VC (m ) * * * * Syndication benefit (min. tr. time) * * * * * * Syndication benefit (car tr. time) * * * * * * Syndication benefit (car distance) * * * * * * * * No. of consecutive round 0.079* * * * * * * Ln(German VC fundraising in m (t-1)) * * * * * Ln(German VC investments in m ) * * * * Return of MSCI SC Germany (ltm) 0.145* * * * * VC's no. of offices * * * * * * * * * significant at 5%; > ; < 0.500

6 304 Appendix Table C.2: Variance inflation factors Base models This table presents variance inflation factors for the base models presented in Table Variance inflation factor (VIF) Variable OL 1 OL 2 OL 3 OL 4 Venture Ln(age) 1,8667 1,9434 1,9554 1,9659 Dummy seed stage round 1,7187 1,7236 1,6819 1,7062 Dummy later stage round 1,7819 1,7986 1,8342 1,8579 Dummy business concept only 1,4579 1,4597 1,4190 1,4513 Dummy shipp.prod./profitable 1,5249 1,5320 1,5334 1,5329 Dummy prior exec. experience 1,3154 1,3335 1,3294 1,3337 Dummy high asset intangibility 1,1033 1,1387 1,1378 1,1640 Dummy high R&D intensity 1,3072 1,3342 1,2983 1,3955 Dummy low book/market 1,2258 1,2847 1,2975 1,4218 Dummy East German venture 1,3289 1,3312 1,3596 1,3630 Dummy urban venture location 1,3051 1,3081 1,3275 1,3445 Venture capitalist Ln(assets under management) 1,7249 2,2612 2,4875 2,4921 Ln(age) 1,5504 1,6759 1,8347 1,9162 HHI industry 1,3618 1,3689 HHI stage 1,1606 1,1623 Dummy corporate VC 1,0718 1,0760 1,0892 1,0923 Dummy (quasi-)public VC 1,2067 1,2504 1,3303 1,3418 Dummy lead-investor 1,1204 1,1298 1,1331 1,1322 Round Investment volume per VC 5,1805 5,2966 5,2029 5,2966 (Investment volume per VC)² 4,4435 4,4889 4,3887 4,4145 Syndication benefit 1,0757 1,0929 1,0944 1,0980 No. of consecutive round 1,3414 1,3713 1,4145 1,4264 Control variables Ln(German VC fundraising (t-1)) 2,1529 2,0897 Ln(German VC investments) 1,1818 1,1685 Return of MSCI SC Germany (ltm) 1,9850 1,9490 2,8178 VC's no. of offices 1,8322 2,0279 2,0570 Year f.e. No No No Yes Max. VIF 5,1805 5,2966 5,2029 5,2966 Mean VIF 1,7325 1,7909 1,7656 1,9956

7 Appendix 305 Table C.3: Ordered logistic regressions Details on venture capitalists experience and reputation This table presents the results of ordered logistic regressions with ordinal categories of the minimum travel time as dependent variable. The models are based on Model OL 2 and scrutinize further details regarding the venture capitalists age. The sample consists of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March Varying sample sizes are due to missing values. Standard errors are adjusted for serial correlation, heteroskedasticity, and nonindependence across observations of the same venture capitalist. Variable OL 1 OL 2 OL 2.6 OL 2.7 Dep. var.: Ordinal min. travel time Venture Ln(age) ** ** ** ** Dummy seed stage round Dummy later stage round Dummy business concept only * ** * * Dummy shipp.prod./profitable Dummy prior exec. experience * * * Dummy high asset intangibility ** * * * Dummy high R&D intensity Dummy low book/market Dummy East German venture ** ** ** ** Dummy urban venture location Venture capitalist Ln(assets under management) *** *** *** Ln(age) * Age (Age)² Dummy corporate VC Dummy (quasi-)public VC *** *** *** *** Dummy lead-investor Round Investment volume per VC *** *** *** *** (Investment volume per VC)² *** *** *** *** Syndication benefit *** *** *** *** No. of consecutive round *** *** *** Control variables Ln(German VC fundraising (t-1)) Ln(German VC investments) Return of MSCI SC Germany (ltm) * * * VC's no. of offices *** *** *** cut cut cut * * * cut *** *** *** *** N LR Chi² *** *** *** *** Nagelkerke's R² Log. Likelihood AIC * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided)

8 306 Appendix Table C.4: Ordered logistic regressions Details on venture capitalists type This table presents the results of ordered logistic regressions with ordinal categories of the minimum travel time as dependent variable. The models scrutinize further details regarding the venture capitalists type. Standard errors are adjusted for serial correlation, heteroskedasticity, and nonindependence across observations of the same venture capitalist. B.: bank; centr.: central; econ. dev.: economic development; sav. savings. Variable OL 2 OL 2.8 OL 3 OL 3.1 Dep. var.: Ordinal min. travel time Venture Ln(age) ** ** Dummy seed stage round Dummy later stage round Dummy business concept only ** ** ** ** Dummy shipp.prod./profitable Dummy prior exec. experience * ** * Dummy high asset intangibility * * * * Dummy high R&D intensity Dummy low book/market Dummy East German venture ** ** ** ** Dummy urban venture location Venture capitalist Ln(assets under management) *** *** *** *** Ln(age) HHI industry HHI stage *** ** Dummy corporate VC Dummy (quasi-)public VC *** *** Dummy MBG * * Dummy subs. of sav./coop. banks *** *** Dummy subs. of state b./coop. centr. inst *** *** Dummy subs. of inst. promoting econ. dev *** *** Other German government ** ** Dummy lead-investor Round Investment volume per VC *** *** *** *** (Investment volume per VC)² *** *** *** *** Syndication benefit *** *** *** *** No. of consecutive round *** *** ** ** Control variables Ln(German VC fundraising (t-1)) Ln(German VC investments) Return of MSCI SC Germany (ltm) * * * * VC's no. of offices *** *** *** *** cut cut cut * cut *** *** *** ** N LR Chi² *** *** *** *** Nagelkerke's R² Log. Likelihood AIC * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided) Trennung

9 Appendix 307 Table C.5: Ordered logistic regressions Details on the investment volume per venture capitalist This table presents the results of ordered logistic regressions with ordinal categories of the minimum travel time as dependent variable. The models are based on Model OL 2 and scrutinize further details regarding the investment volume per venture capitalist. The sample consists of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March Model OL2.10 only includes dyads with investment volumes per venture capitalist up to 4.85 m and Model OL2.11 includes all dyads with investment volumes of at least 4.85 m. Standard errors are adjusted for serial correlation, heteroskedasticity, and nonindependence across observations of the same venture capitalist. Variable OL 2 OL 2.9 OL 2.10 OL 2.11 Dep. var.: Ord nal min. travel time Venture Ln(age) ** *** ** Dummy seed stage round Dummy later stage round Dummy business concept only ** ** ** - Dummy shipp.prod./profitable ** Dummy prior exec. experience * * Dummy high asset intangibility * * Dummy high R&D intensity ** Dummy low book/market ** Dummy East German venture ** ** * * Dummy urban venture location Venture capitalist Ln(assets under management) *** *** *** Ln(age) Dummy corporate VC *** Dummy (quasi-)public VC *** *** *** ** Dummy lead-investor Round Investment volume per VC *** *** (Investment volume per VC)² *** Syndication benefit *** *** *** No. of consecutive round *** *** ** Control variables Ln(German VC fundraising (t-1)) ** Ln(German VC investments) Return of MSCI SC Germany (ltm) * * * * VC's no. of offices *** *** *** * cut * cut * cut * * cut *** *** *** N LR Chi² *** *** *** 70.01*** Nagelkerke's R² Log. Likelihood AIC * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided)

10 308 Appendix Table C.6: Ordered logistic regressions Details on syndication This table presents the results of ordered logistic regressions with ordinal categories of the minimum travel time as dependent variable. The models are based on Model OL 2 and scrutinize further details regarding the syndication of VC transactions. The sample consists of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March Varying sample sizes are due to missing values. Standard errors are adjusted for serial correlation, heteroskedasticity, and nonindependence across observations of the same venture capitalist. Variable OL 2 OL 2.12 OL 2.13 OL 2.14 Dep. var.: Ordinal min. travel time Venture Ln(age) ** ** ** ** Dummy seed stage round Dummy later stage round Dummy business concept only ** * ** *** Dummy shipp.prod./profitable Dummy prior exec. experience * *** *** Dummy high asset intangibility * * Dummy high R&D intensity Dummy low book/market * *** Dummy East German venture ** ** *** *** Dummy urban venture location * *** ** Venture capitalist Ln(assets under management) *** *** *** *** Ln(age) Dummy corporate VC Dummy (quasi-)public VC *** *** *** *** Dummy lead-investor *** Round Investment volume per VC *** ** *** *** (Investment volume per VC)² *** *** *** *** Syndication benefit *** No. of synd. partners * Dummy close synd. partner *** Difference betw. VC distance and distance of closest synd. partner *** No. of consecutive round *** *** ** Control variables Ln(German VC fundraising (t-1)) ** *** Ln(German VC investments) Return of MSCI SC Germany (ltm) * ** ** *** VC's no. of offices *** *** *** *** cut cut cut * * cut *** ** ** *** N LR Chi² *** *** *** *** Nagelkerke's R² Log. Likelihood AIC * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided)

11 Appendix 309 Table C.7: Brant test Base models This table summarizes the results of the Brant test of the parallel lines assumption for Models OL 1 to 4. The null hypothesis is that all coefficients/the respective coefficient are/is equal across the different response categories. A significant chi² statistic rejects this null hypothesis. Chi² Variable OL 1 OL 2 OL 3 OL 4 Venture Ln(age) Dummy seed stage round 7.16* 7.59* 11.00** 8.67** Dummy later stage round Dummy business concept only 7.60* 7.76* 7.23* 6.28* Dummy shipp.prod./profitable Dummy prior exec. experience Dummy high asset intangibility Dummy high R&D intensity 13.12*** 13.95*** Dummy low book/market * Dummy East German venture 8.98** 11.62*** * Dummy urban venture location *** *** 96.92*** *** Venture capitalist Ln(assets under management) 8.61** * 7.38* Ln(age) 7.63* 6.32* HHI industry 18.31*** 17.92*** HHI stage 12.61*** 12.73*** Dummy corporate VC Dummy (quasi-)public VC 39.82*** 48.30*** 43.93*** 45.85*** Dummy lead-investor Round Investment volume per VC ** 9.55** (Investment volume per VC)² ** 8.95** Syndication benefit 36.24*** 29.62*** 27.02*** 27.51*** No. of consecutive round Control variables Ln(German VC fundraising (t-1)) 9.00** 6.99* Ln(German VC investments) Return of MSCI SC Germany (ltm) VC's no. of offices 13.26*** 12.31*** 11.74*** Year f.e. No No No Yes Joint test for all variables *** *** *** *** * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided)

12 310 Appendix Table C.8: Brant test Details for Model OL 3 This table presents the estimated coefficients of the binary logistic regressions that were used in order to conduct the Brant test of the parallel lines assumption for Model OL 3. The first column (y>1) tests category 1 versus 2, 3, 4, and 5; the second (y>2) tests 1 and 2 versus 3, 4, and 5; etc. Coefficient Variable y>1 y>2 y>3 y>4 Venture Ln(age) Dummy seed stage round Dummy later stage round Dummy business concept only Dummy shipp.prod./profitable Dummy prior exec. experience Dummy high asset intangibility Dummy high R&D intensity Dummy low book/market Dummy East German venture Dummy urban venture location Venture capitalist Ln(assets under management) Ln(age) HHI industry HHI stage Dummy corporate VC Dummy (quasi-)public VC Dummy lead-investor Round Investment volume per VC (Investment volume per VC)² Syndication benefit No. of consecutive round Control variables Ln(German VC fundraising (t-1)) Ln(German VC investments) Return of MSCI SC Germany (ltm) VC's no. of offices Constant

13 Appendix 311 Table C.9: Ordinary least squares regressions Base models This table presents the results of ordinary least squares regressions with ln(1+minimum travel time) as dependent variable. The sample consists of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March Varying sample sizes are due to missing values. Standard errors are adjusted for serial correlation, heteroskedasticity, and nonindependence across observations of the same venture capitalist. Variable OLS 1 OLS 2 OLS 3 OLS 4 Dep. var.: ln(1+min. travel time) Venture Ln(age) ** *** ** ** Dummy seed stage round Dummy later stage round Dummy business concept only ** ** *** *** Dummy shipp.prod./profitable Dummy prior exec. experience Dummy high asset intangibility ** * * Dummy high R&D intensity Dummy low book/market Dummy East German venture * ** ** ** Dummy urban venture location * ** ** ** Venture capitalist Ln(assets under management) *** *** *** Ln(age) * * HHI industry HHI stage ** ** Dummy corporate VC Dummy (quasi-)public VC ** *** *** *** Dummy lead-investor Round Investment volume per VC ** (Investment volume per VC)² ** ** * Syndication benefit *** *** *** *** No. of consecutive round ** ** ** Control variables Ln(German VC fundraising (t-1)) * Ln(German VC investments) Return of MSCI SC Germany (ltm) ** ** VC's no. of offices *** *** *** Constant *** *** Year f.e. No No No Yes N F-value 6.089*** *** *** *** R² Adj. R² * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided)

14 312 Appendix Table C.10: Tobit regressions Base models This table presents the results of left-censored tobit regressions with the minimum travel time as dependent variable. The sample consists of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March Varying sample sizes are due to missing values. Standard errors are bootstrapped and the censoring value is 0. Variable Tobit 1 Tobit 2 Tobit 3 Tobit 4 Dep. var.: min. travel time Venture Ln(age) *** *** ** * Dummy seed stage round Dummy later stage round Dummy business concept only * * Dummy shipp.prod./profitable Dummy prior exec. experience *** ** Dummy high asset intangibility ** Dummy high R&D intensity Dummy low book/market Dummy East German venture *** *** *** *** Dummy urban venture location Venture capitalist Ln(assets under management) *** *** *** *** Ln(age) ** * HHI industry * * HHI stage *** *** Dummy corporate VC Dummy (quasi-)public VC *** *** *** *** Dummy lead-investor Round Investment volume per VC *** *** (Investment volume per VC)² ** *** Syndication benefit *** *** *** *** No. of consecutive round ** ** ** Control variables Ln(German VC fundraising (t-1)) Ln(German VC investments) Return of MSCI SC Germany (ltm) VC's no. of offices *** *** *** Constant *** Year f.e. No No No Yes N LR Chi² *** *** *** *** McFadden's R² Log. Likelihood AIC * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided)

15 Appendix 313 Table C.11: Ordered logistic regressions Different measures of spatial proximity This table presents the results of ordered logistic regressions with ordinal categories of different measures of spatial proximity as dependent variable. The models are based on Models OL 2 and OL 3. The sample is restricted to European investors and consists of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March Varying sample sizes are due to missing values. Standard errors are adjusted for serial correlation, heteroskedasticity, and nonindependence across observations of the same venture capitalist. Intang.: intangible; v.: venture. Variable OL 2.14 OL 2.15 OL 2.16 OL 3.4 OL 3.5 OL 3.6 Dep. var.: Ordinal min. travel time car time car distance min. travel time car time car distance Venture Ln(age) 0.166** 0.138* 0.147* Dummy seed stage round Dummy later stage round Dummy bus. concept only 0.968** 0.943* 1.294*** 1.118** 1.085** 1.425*** Dummy shipp.prod./prof Dummy prior exec. exp * ** ** ** ** ** Dummy high asset intang * ** ** * ** ** Dummy high R&D intensity Dummy low book/market * Dummy East German venture 0.600** 0.710*** 0.593** 0.615** 0.685** 0.554* Dummy urban v. location * * Venture capitalist Ln(assets under mgt.) 0.328*** 0.345*** 0.313*** 0.371*** 0.376*** 0.329*** Ln(age) HHI industry HHI stage 1.793** 1.647** 1.575** Dummy corporate VC Dummy (quasi-)public VC *** *** *** *** *** *** Dummy lead-investor Round Investment volume per VC 0.267*** 0.220*** 0.196** 0.263*** 0.212** 0.201** (Investment volume per VC)² *** *** *** *** *** *** Syndication benefit 0.010*** 0.010*** 0.006*** 0.009*** 0.011*** 0.006*** No. of consecutive round *** ** ** *** ** ** Control variables Ln(German VC fundr. (t-1)) * Ln(German VC inv.) Return of MSCI SC Germany (ltm) 0.448* 0.589** 0.567** 0.481* 0.544* 0.527* VC's no. of offices *** *** *** *** *** *** cut cut cut cut *** 4.242** 5.424** 5.467** 4.002* 5.485** N LR Chi² 311.5*** 328.8*** 363.8*** 286.4*** 296.3*** 319.7*** Nagelkerke's R² Log. Likelihood AIC * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided)

16 314 Appendix Table C.12: Ordinary least squares regressions Different measures of spatial proximity This table presents the results of ordinary least squares regressions with different measures of spatial proximity as dependent variable. The models are based on Models OLS 2 and OLS 3. The sample is restricted to European investors and consists of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March Varying sample sizes are due to missing values. Standard errors are adjusted for serial correlation, heteroskedasticity, and nonindependence across observations of the same venture capitalist.. Intang.: intangible; v.: venture. Variable OLS 2.1 OLS 2.2 OLS 2.3 OLS 3.1 OLS 3.2 OLS 3.3 Dep. var.: Ln(1+min. tr. time) Ln(1+car time) Ln(1+car distance) Ln(1+min. tr. time) Ln(1+car time) Ln(1+car distance) Venture Ln(age) 0.141** 0.144** 0.180** 0.123** 0.119* 0.151* Dummy seed stage round Dummy later stage round Dummy bus. concept only 0.847** 0.867** 1.129*** 0.860*** 0.898*** 1.180*** Dummy shipp.prod./prof Dummy prior exec. exp * * * * Dummy high asset intang ** * * ** ** ** Dummy high R&D intensity Dummy low book/market Dummy East German venture 0.375** 0.444** 0.543** 0.380** 0.442** 0.518* Dummy urban v. location ** ** ** * ** Venture capitalist Ln(assets under mgt.) 0.246*** 0.275*** 0.318*** 0.258*** 0.279*** 0.319*** Ln(age) HHI industry HHI stage 1.066** 1.309*** 1.444*** Dummy corporate VC Dummy (quasi-)public VC *** *** *** *** *** *** Dummy lead-investor Round Investment volume per VC (Investment volume per VC)² ** ** * * * * Syndication benefit 0.006*** 0.004*** 0.003*** 0.006*** 0.005*** 0.004*** No. of consecutive round ** ** ** ** ** ** Control variables Ln(German VC fundr. (t-1)) * * Ln(German VC inv.) Return of MSCI SC Germany (ltm) 0.337* 0.357* 0.525** 0.364** 0.367* 0.518** VC's no. of offices *** *** *** *** *** *** Constant N F-value 27.17*** 20.06*** 21.94*** 19.20*** 18.05*** 21.88*** R² Adj. R² * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided)

17 Appendix 315 D Appendix Likelihood of a Venture Capital Investment Table D.1: Variance inflation factors Base models of rare event logistic regressions This table presents variance inflation factors for the base models presented in Table Variance inflation factor (VIF) Variable REL 1 REL 2 REL 3 REL 4 REL 5 Distance (ln[1+min. travel time]) Venture Ln(age) dist _Intercept Dummy seed stage round dist Dummy later stage round dist Dummy bus. concept only dist _Intercept Dummy shipp.prod./prof. dist _Intercept Dummy prior exec. exp. dist _Intercept Dummy high asset intang. dist _Intercept Dummy high R&D intensity dist _Intercept Dummy low book/market dist _Intercept Dummy East Ger. venture dist _Intercept Dummy urban v. location dist _Intercept Venture capitalist Ln(assets under mgt.) dist Ln(age) dist _Intercept HHI industry dist HHI stage dist Dummy corporate VC dist Dummy (quasi-)public VC dist Dummy lead-investor dist Round Inv. volume per VC dist _Intercept (Inv. volume per VC)² dist _Intercept Syndication benefit dist _Intercept Control variables Ln(Ger. VC fundraising (t-1)) Ln(Ger. VC investments) Return of MSCI SC Ger. (ltm) Year f.e. No No No Yes No Max. VIF Mean VIF

18 316 Appendix Table D.2: Rare event logistic regressions Details on the venture capitalist s experience and reputation This table presents the results of rare event logistic regressions with a dummy variable indicating whether a VC financing relationship actually occurred (1) or not (0) as dependent variable. The models scrutinize further details regarding the venture capitalist s age and include variables stepwise. The sample consists of realized dyads of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March 2007 and a matching sample. Financing rounds with missing values or for which no match existed as well as five outliers are excluded pairwise. Coefficients and standard errors are adjusted for rare events, choice-based sampling, serial correlation, heteroskedasticity, and nonindependence across venture capitalists. V.: venture. Variable REL 2.20 REL 2.21 REL 2.22 REL 2.23 REL 2.24 REL 2.25 REL 2.26 REL 2 REL 3 Dep. var.: realized dyad (yes/no) Distance (ln[1+min. travel time]) *** *** *** *** *** *** *** *** *** Venture Ln(age) dist _Intercept ** ** ** ** * ** Dummy seed stage round dist * * * * Dummy later stage round dist Dummy bus. concept only dist * * * _Intercept Dummy shipp.prod./prof. dist _Intercept Dummy prior exec. exp. dist * * * _Intercept Dummy high asset intang. dist ** * ** ** ** _Intercept Dummy high R&D intensity dist * ** _Intercept Dummy low book/market dist _Intercept ** Dummy East Ger. venture dist _Intercept ** ** Dummy urban v. location dist * ** _Intercept **

19 Appendix 317 Table D.2 cont.: Rare event logistic regressions Details on the venture capitalist s experience and reputation Variable REL 2.20 REL 2.21 REL 2.22 REL 2.23 REL 2.24 REL 2.25 REL 2.26 REL 2 REL 3 Venture capitalist Ln(assets under mgt.) dist *** *** * Ln(age) dist ** ** ** ** ** _Intercept HHI industry dist HHI stage dist Dummy corporate VC dist Dummy (quasi-)public VC dist *** *** *** ** *** ** ** Dummy lead-investor dist Round Inv. volume per VC dist *** *** *** *** *** *** *** ** _Intercept (Inv. volume per VC)² dist *** *** *** ** ** ** ** ** _Intercept Syndication benefit dist * ** _Intercept ** ** Control variables Ln(Ger. VC fundraising (t-1)) * * Ln(Ger. VC investments) Return of MSCI SC Ger. (ltm) * * Constant N LR Chi² 38.64*** 42.45*** 47.07*** 56.97*** *** 60.41*** *** 70.87*** *** Log. Likelihood * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided)

20 318 Appendix Table D.3: Rare event logistic regressions Details on the venture capitalist s specialization This table presents the results of rare event logistic regressions with a dummy variable indicating whether a VC financing relationship actually occurred (1) or not (0) as dependent variable. The models scrutinize further details regarding the venture capitalist s industry and stage specialization and include variables stepwise. The sample consists of realized dyads of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March 2007 and a matching sample. Financing rounds with missing values or for which no match existed as well as five outliers are excluded pairwise. Coefficients and standard errors are adjusted for rare events, choice-based sampling, serial correlation, heteroskedasticity, and nonindependence across venture capitalists. V.: venture. Variable REL 3.1 REL 3.2 REL 3.3 REL 3.4 REL 3.5 REL 3.6 REL 3.7 REL 3.8 REL 3 Dep. var.: realized dyad (yes/no) Distance (ln[1+min. travel time]) *** *** *** *** *** *** *** *** *** Venture Ln(age) dist _Intercept ** ** *** ** ** ** Dummy seed stage round dist * * * * Dummy later stage round dist Dummy bus. concept only dist * * _Intercept ** ** Dummy shipp.prod./prof. dist _Intercept Dummy prior exec. exp. dist * * ** _Intercept Dummy high asset intang. dist * * ** ** ** _Intercept Dummy high R&D intensity dist * ** _Intercept Dummy low book/market dist _Intercept * * * ** Dummy East Ger. venture dist _Intercept *** ** ** Dummy urban v. location dist *** ** _Intercept

21 Appendix 319 Table D.3 cont.: Rare event logistic regressions Details on the venture capitalist s specialization Variable REL 3.1 REL 3.2 REL 3.3 REL 3.4 REL 3.5 REL 3.6 REL 3.7 REL 3.8 REL 3 Venture capitalist Ln(assets under mgt.) dist * Ln(age) dist ** _Intercept HHI industry dist *** *** *** ** ** ** * HHI stage dist *** ** ** ** ** ** ** * Dummy corporate VC dist Dummy (quasi-)public VC dist ** * * ** ** Dummy lead-investor dist Round Inv. volume per VC dist *** *** *** ** ** ** ** ** _Intercept (Inv. volume per VC)² dist ** *** ** ** ** ** ** ** _Intercept Syndication benefit dist * ** ** ** _Intercept ** ** ** ** Control variables Ln(Ger. VC fundraising (t-1)) Ln(Ger. VC investments) Return of MSCI SC Ger. (ltm) Constant N LR Chi² 40.80*** 43.37*** 45.94*** 52.53*** 54.95*** 61.58*** *** *** *** Log. Likelihood * significant at 10%; ** significant at 5%; *** significant at 1% (two-sided)

22 320 Appendix Table D.4: Rare event logistic regressions Details on the venture capitalist s type This table presents the results of rare event logistic regressions with a dummy variable indicating whether a VC financing relationship actually occurred (1) or not (0) as dependent variable. The models scrutinize further details regarding the venture capitalist s type. The sample consists of realized dyads of venture capitalists and German portfolio companies which have closed a financing round between January 2002 and March 2007 and a matching sample. Financing rounds with missing values or for which no match existed as well as five outliers are excluded pairwise. Coefficients and standard errors are adjusted for rare events, choice-based sampling, serial correlation, heteroskedasticity, and nonindependence across venture capitalists. B.: bank; centr.: central; econ. dev.: economic development; sav. savings; v.: venture. Variable REL 2 REL 2.27 REL 2.28 REL 3 REL 3.9 REL 3.10 Dep. var.: realized dyad (yes/no) Distance (ln[1+min. travel time]) *** *** *** *** *** *** Venture Ln(age) dist _Intercept * * ** ** Dummy seed stage round dist * Dummy later stage round dist * Dummy bus. concept only dist _Intercept Dummy shipp.prod./prof. dist _Intercept Dummy prior exec. exp. dist _Intercept Dummy high asset intang. dist ** ** * ** ** _Intercept Dummy high R&D intensity dist * ** * * _Intercept Dummy low book/market dist _Intercept ** * Dummy East Ger. venture dist _Intercept ** * ** * Dummy urban v. location dist * * ** ** _Intercept ** *