What is the role of Government Venture Capital for innovation-driven entrepreneurship?

Marius Berger, Antoine Dechezleprêtre and Milenko Fadic

No 2024/10, OECD Science, Technology and Industry Working Papers from OECD Publishing

Abstract: Government Venture Capital (GovVC) has emerged as a policy tool to complement private venture capital (Private VC) by funding innovation-driven firms that might not attract traditional VC investment. This study analyses GovVC's role in OECD Member countries using comprehensive data on entrepreneurial firms, investors, and patents, with GovVC entities identified through surveys of ministry experts. The analysis shows that GovVC-funded firms are typically riskier than Private VC funded ones and generally demonstrate lower performance in securing follow-on funding and innovation output. However, when GovVCs partner with Private VC investors, these performance gaps diminish significantly. In co-investment scenarios, firms show comparable innovation and exit performance to those funded solely by Private VC. The findings indicate that GovVC can effectively direct capital to overlooked firms, particularly when working in partnership with private investors.

Keywords: Entrepreneurship; Government Policy; Innovation; Venture Capital (search for similar items in EconPapers)
JEL-codes: G24 O31 O38 (search for similar items in EconPapers)
Date: 2024-11-12
New Economics Papers: this item is included in nep-cfn, nep-cse, nep-ent, nep-ino, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:oec:stiaaa:2024/10-en

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