Government-backed venture capital investments and performance of companies: The role of networks

Monika Köppl-Turyna, Stefan Köppl and Dimitris Christopulos

No 21, Research Papers from EcoAustria – Institute for Economic Research

Abstract: In this paper we analyze how different types of venture capital investments - private, public and indirect public - affect performance of portfolio companies. We use data on more than 20,000 VC deals in Europe between 2000 and 2018 and we hand collected a unique dataset on the institutional setting (public/indirect/private) of almost 5000 investors. We find that public VC investors perform consistently worse than purely private ones, while indirect public investments (such as the "Juncker Plan" or InvestEU investments) perform consistently better. We link these findings to the fact that public funds do not enter the best performing cliques of investments. On the other hand, indirect funds invest in the VC funds with the best network characteristics, which raises a question of whether indirect VC investments are associated with a high level of windfall gain, and not necessarily improve the value added by the VC funds. We confirm the main conclusions using instrumental variables' specifications.

Keywords: venture capital; network analysis; governmental venture capital; European Investment Fund; syndication; public policy (search for similar items in EconPapers)
JEL-codes: D73 G24 G28 H81 L26 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-net and nep-ure
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ecoarp:21

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