Sustainable Investments in Responsible SMEs: That’s What’s Distinguish Government VCs from Private VCs

Jeaneth Johansson, Malin Malmström and Joakim Wincent
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Jeaneth Johansson: Center for Innovation, Entrepreneurship and Learning Research (CIEL), Department for Business Studies, School of Business, Innovation and Sustainability, Halmstad University, 301 18 Halmstad, Sweden
Malin Malmström: Entrepreneurship and Innovation, Department of Social Sciences, Technology and Arts, Luleå University of Technology, 971 87 Luleå, Sweden
Joakim Wincent: Entrepreneurship, Management and Organisation, Hanken School of Economics, 00101 Helsinki, Finland

JRFM, 2021, vol. 14, issue 1, 1-22

Abstract: Researchers question the impact of governmental venture capitalists (GVC) compared to private venture capitalists (PVC), but we know little about why this difference occurs and if this criticism is justified. We observed a group of GVCs and developed a new model that describes the way that GVCs process signals pre- and post-decisions. Certain macro level factors severely undermine micro level performance, causing GVCs to financially underperform with respect to PVCs. This helped us to understand that GVCs do not make investment decisions in the same way as PVCs, and what undermines the performance of GVCs’ decision-making processes. The main goals of GVCs are to promote investments in responsible SMEs, mobilizing societal impact. We discuss that the criticism of GVC needs to be more nuanced, as they have a different role than PVC in the financial system as providers of sustainable investments in responsible SMEs.

Keywords: sustainable investments; entrepreneurial finance; government venture capital; private venture capital; responsible ventures; decision-making (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
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