Cross-border investments represent a substantial share of venture capital activities. We use a comprehensive dataset on investments worldwide to analyze the internationalization of venture capital financing. We postulate that cross-border activity is shaped by macroeconomic factors in the venture capitalists' and the portfolio companies' countries, as well as characteristics of the venture capitalists and the deals, which likely affect the costs and benefits of investing abroad. In order to analyze how country-specific, venture capitalist-specific and deal-specific factors affect cross-border activity, we use the country, venture capitalist and portfolio company perspectives. Our results suggest that factors capturing the benefits and costs of investing abroad determine international venture capital flows. © 2010 Elsevier Ltd.