Venture capital and government involvement from a qualitative systematic literature review perspective

Erika Jáki () and Endre Mihály Molnár
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Erika Jáki: Institute for the Development of Enterprises, Corvinus University of Budapest, Budapest, Fővám tér 8, H-1093, Hungary
Endre Mihály Molnár: Institute for the Development of Enterprises, Corvinus University of Budapest, Budapest, Fővám tér 8, H-1093, Hungary

Acta Oeconomica, 2021, vol. 71, issue 4, 645-663

Abstract: The financing of young start-up companies is hindered by market failures that prompt governments around the world to intervene at the venture capital market. The aim of this paper is to give a comprehensive overview on this research field based on sound systematic literature review methodology, which was never done before. We found three major themes: pure governmental venture capital involvement, governmental-private venture capital cooperation, and governmental involvement in the financing of pre-seed startups. The evaluation of the governmental efforts varies according to these themes and also the investigated geographic location. Generally, pure governmental venture capital is the most controversial theme, the government-private cooperation is mostly viewed in a positive light, while the authors almost unanimously praise the government’s efforts when financing pre-seed startups. We found that the success of governmental venture capital should not be judged based on the realized return of its investments, since profit maximalization is not its goal. The governments try to alleviate market failures at the venture capital market and transition financed startup companies to private financing. Thus, we advise researchers to use the number of this type of successful transitions as the success criteria of governmental investments.

Keywords: venture capital; government; state; startup financing; GVC (search for similar items in EconPapers)
JEL-codes: G24 G31 G38 L26 (search for similar items in EconPapers)
Date: 2021
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