The importance of trust for investment: Evidence from venture capital

L. Bottazzi, Marco Da Rin, T. Hellmann

Research output: Contribution to journalArticleScientificpeer-review

225 Citations (Scopus)
2584 Downloads (Pure)


We examine the effect of trust in venture capital. Our theory predicts a positive relationship of trust with investment, but a negative relationship with success. Using a hand-collected dataset of European venture capital deals, we find that the Eurobarometer measure of trust among nations positively predicts venture capital firms’ investment decisions, but that it has a negative correlation with successful exits. Our theory also predicts that earlier stage investments require higher trust, that syndication is more valuable in low-trust situations, and that higher trust investors use more contingent contracts. The empirical evidence supports these predictions.
Original languageEnglish
Pages (from-to)2283-2318
JournalReview of Financial Studies
Issue number9
Publication statusPublished - Sept 2016


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