In this paper we study how cultural distance between entrepreneurial ventures and prospective venture capital investors affects the likelihood of investment realization. Whilst other scholars addressed this question by investigating whether and how cross-country cultural distance affects cross-border venture capital investments, we exploit sub-country measures of cultural distance to extend the analysis to domestic investments. Based on a unique database of venture capital investments in European entrepreneurial ventures during the period 1998-2014, we show that sub-national cultural distance is negatively associated to the likelihood of investment realization. Furthermore, domestic venture capital investments are more affected by cultural distance than cross-border investments.
Massimiliano Gueriniis an Assistant Professor at the Politecnico di Milano School of Management. He holds a PhD in Management, Economics and Industrial Engineering from the Politecnico di Milano and he was Visiting Fellow at the Harvard Business School. His research interests are in the area of entrepreneurship, university-industry linkages, and entrepreneurial finance. He has published on these topics in Journal of Business Venturing, California Management Review, Journal of Corporate Finance, Research Policy, and Small Business Economics, among others.