Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Friday, November 29, 2019

GDPR and the Localness of Venture Investment

Jian Jia, Illinois Institute of Technology - Stuart School of Business, Ginger Zhe Jin, University of Maryland - Department of Economics; National Bureau of Economic Research (NBER), and Liad Wagman, Illinois Institute of Technology - Stuart School of Business, IIT have an interesting paper on GDPR and the Localness of Venture Investment. Worth downloading!

ABSTRACT: We examine how investors' tendency to prefer investing in local ventures interacts with the effects of the General Data Protection Regulation (GDPR) on venture investment in the European Union (EU). Using five-year investment data in EU and US ventures, we demonstrate that GDPR's enactment and rollout differentially affect investors as a function of their proximity to ventures. Specifically, we show that GDPR's rollout in 2018 has a negative effect on EU venture investment and the effects are higher when ventures and lead investors are not in the same country or union. The relationship manifests in the number of deals per month and in the amount invested per deal, and is particularly pronounced for newer and data-related ventures. We further show that GDPR's enactment in 2016 exhibits similar effects but only with respect to lead investors that invest across different industries.

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