 Start-up subsidies and the sources of venture capitalMarius Berger and Hanna Hottenrott Journal of Business Venturing Insights, 2021, vol. 16, issue C Abstract: Research suggests that public subsidies for newly founded firms have a positive effect on follow-on financing, in particular on Venture Capital (VC), through providing certification and early-stage liquidity. This study shows that the various sources of VC value public start-up subsidies differently. It is the first to differentiate between distinct types of investors who pursue different investment strategies. We show for a large sample of knowledge-intensive start-ups that there is indeed a correlation between subsidies and all sources of VC (Government VC, Independent VC, Corporate VC, and Business Angels). However, when accounting for firm characteristics that drive both selection into public subsidies as well as into VC financing through econometric matching techniques, subsidies are no longer linked to all types, but mainly to Government VC and Business Angel financing. We discuss possible explanations for this finding and implications for entrepreneurial finance. Keywords: Start-up subsidies; Entrepreneurship policy; Entrepreneurial finance; Venture capital; Business angels (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jobuve:v:16:y:2021:i:c:s2352673421000500 DOI: 10.1016/j.jbvi.2021.e00272 Access Statistics for this article Journal of Business Venturing Insights is currently edited by Dimo Dimov More articles in Journal of Business Venturing Insights from Elsevier |
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