Asymmetric information and deal selection: evidence from the Italian venture capital market

  • Francesco Bollazzi
  • Giuseppe RisalvatoEmail author
  • Claudio Venezia


The aim of this study is to show how information asymmetry affects the venture capital (VC) deal selection process in the Italian capital market. In this paper, the authors want to analyse how venture capitalists (VCs) choose which new companies to sustain. In the absence of information about these start-ups, investors encounter difficulties when evaluating the quality of new firms. VCs can only assess the value of observable characteristics, relying on a background affected by information asymmetries, such as the entrepreneur and the management team, patents, and the presence of strategic alliances. The authors use information collected in a dataset built on information contained in the Bureau van Dijk database, completed with data collected through a survey sent to VC funds. The period under observation is between 2012 and 2017. The dataset is composed of 150 observations, and represents a significant sample of the Italian market. The results show that there is a positive relationship between management education, the management team’s international experience, number of patents and the likelihood of receiving financing from VCs. This reasoning allows for highlighting the importance of matching the business idea with the investment decision made between VCs and new enterprises, especially when the better-informed part, the firms, can send a signal of quality to the less-informed part, the VCs.


Asymmetric information Investments decision Venture capital Start-up 

JEL Classification

D82 G11 G24 


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Liuc Carlo Cattaneo UniversityCastellanzaItaly
  2. 2.KPMG AdvisoryRomeItaly

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