65 Pages Posted: 5 Feb 2013 Last revised: 12 Jun 2015
Date Written: February 5, 2013
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.
Keywords: innovation, R&D, patents, venture capital, private equity, grants, VC, PE
JEL Classification: G24, G31, O31, O32
Suggested Citation: Suggested Citation
Humphery-Jenner, Mark and Suchard, Jo-Ann, VC/PE Funds, Government Grants and Innovation in Newly Public Firms (February 5, 2013). UNSW Australian School of Business Research Paper No. 2013 BFIN 01. Available at SSRN: https://ssrn.com/abstract=2211919 or http://dx.doi.org/10.2139/ssrn.2211919