Government venture capital and cross-border investment

Arash Soleimani Dahaj and Brian Paul Cozzarin

Global Finance Journal, 2019, vol. 41, issue C, 113-127

Abstract: We use data on venture capital investments from 26 countries from 1998–2013. We investigate the following questions: Do domestic government sponsored venture capital funds augment or curtail domestic private venture capital funds from cross-border investment? Do government sponsored venture capital funds attract or repel foreign private venture capital investment? The results show that a preponderance of mixed-structured over pure-structured government venture capital investment has a crowding-in effect overall: it attracts domestic and international private venture capital to the domestic venture capital market while simultaneously increasing total private venture capital investment. In contrast, a preponderance of pure-government over mixed-government venture capital fund investment repels foreign private venture capital investment (has a crowding out effect). We find that both these effects are more pronounced for domestic rather than foreign private venture capital and that the attraction effect is stronger than the repulsion effect.

Keywords: Government venture capital fund; Private venture capital fund; Cross-border investment; Crowding-out; Crowding-in; Dynamic panel data (search for similar items in EconPapers)
JEL-codes: F21 G24 G38 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:41:y:2019:i:c:p:113-127

DOI: 10.1016/j.gfj.2019.03.001

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