VC/PE Funds, Government Grants and Innovation in Newly Public Firms
UNSW Australia Business School; Financial Research Network (FIRN); Centre for International Finance and Regulation (CIFR)
University of New South Wales (UNSW) - School of Banking and Finance; Financial Research Network (FIRN); Centre for International Finance and Regulation (CIFR)
February 5, 2013
UNSW Australian School of Business Research Paper No. 2013 BFIN 01
We highlight the circular relationship between venture capital and private equity (VC/PE) investment, R&D grants, and innovation. We focus on Australia, which has low levels of innovation and VC/PE activity, but has a comparable legal environment to other developed, but high innovation markets. We show that government grants encourage VC/PE investment and that VC funds and government grants increase both innovation inputs (R&D) and outputs (patents and citations) in newly public firms. Buyout funds only increase outputs, and large funds and domestic funds are best able to induce innovation outputs. This highlights the importance of both grant schemes and VC/PE investment to innovation.
Number of Pages in PDF File: 65
Keywords: innovation, R&D, patents, venture capital, private equity, grants, VC, PE
JEL Classification: G24, G31, O31, O32working papers series
Date posted: February 5, 2013 ; Last revised: March 4, 2013
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