Public Subsidies and the Sources of Venture Capital

23 Pages Posted: 21 Jan 2021

See all articles by Marius Berger

Marius Berger

ZEW – Leibniz Centre for European Economic Research

Hanna Hottenrott

Technische Universität München (TUM)

Date Written: 2020

Abstract

Research suggests that public subsidies for newly founded firms have a positive effect on follow-on financing, in particular, Venture Capital (VC). This study differentiates between Government VC, Independent VC, Corporate VC, and Business Angels and shows that public subsidies are not relevant for all of these sources. When accounting for firm characteristics that drive both selection into public subsidies as well as into VC financing through econometric matching techniques, we find that subsidies are only linked to Government VC and Business Angel financing.

Keywords: Start-up Subsidies, Entrepreneurship Policy, Entrepreneurial Finance, Venture Capital, Business Angels

JEL Classification: G24, L26, O25, O31

Suggested Citation

Berger, Marius and Hottenrott, Hanna, Public Subsidies and the Sources of Venture Capital (2020). ZEW - Centre for European Economic Research Discussion Paper No. 20-086, Available at SSRN: https://ssrn.com/abstract=3770514 or http://dx.doi.org/10.2139/ssrn.3770514

Marius Berger

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Hanna Hottenrott (Contact Author)

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

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