Bridging the equity gap for young innovative companies: The design of effective government venture capital fund programs

Posted: 19 Jan 2016 Last revised: 30 Jun 2020

See all articles by Yan Alperovych

Yan Alperovych

EMLYON Business School

Alexander Peter Groh

EMLYON Business School

Anita Quas

University of Milan

Date Written: July 1, 2020

Abstract

Governmental venture capital funds (GVCs) are created by policymakers around the world to support young innovative companies (YICs) with the aim of “bridging the equity gap”. In this paper, we study the heterogeneity in the design of GVC programs in Europe and identify the design features that are most effective in achieving the desired outcomes of this policy. Specifically, we focus on the probability that GVC-backed companies will receive additional funds from private venture capital investors and, ultimately, changes in their growth and innovation outcomes. We find that the choices of location, colocation, syndication and industry focus of a GVC program substantially influence the extent to which it is able to achieve such goals. Important policy implications are discussed.

Keywords: Governmental Venture Capital, Equity Gap, Experience, Regional Characteristics, Regulatory Capture

JEL Classification: G24, G38

Suggested Citation

Alperovych, Yan and Groh, Alexander Peter and Quas, Anita, Bridging the equity gap for young innovative companies: The design of effective government venture capital fund programs (July 1, 2020). Research Policy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2718061 or http://dx.doi.org/10.2139/ssrn.2718061

Yan Alperovych (Contact Author)

EMLYON Business School ( email )

23 Avenue Guy de Collongue
Ecully, 69132
France

Alexander Peter Groh

EMLYON Business School ( email )

23 Avenue Guy de Collongue
Ecully, 69132
France

Anita Quas

University of Milan ( email )

Via Festa del Perdono, 7
Milan, 20122
Italy

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