Government Sponsored Venture Capital: Blessing Or Curse?

Erika Jaki, Endre Mihaly Molnar and Gyorgy Walter
Additional contact information
Erika Jaki: Corvinus University of Budapest, Hungary
Endre Mihaly Molnar: Corvinus University of Budapest, Hungary

Management, 2017, vol. 12, issue 4, 317-331

Abstract: Young companies with growth opportunities face serious problems when it comes to financing. The private venture capital (VC) market fails to provide sufficient funding for this segment. First, we present the main characteristics of start-up companies and market failures that can lead to government intervention. These failures include asymmetric information embodied in the business plan; high transaction costs of the investment process from the investment decision to the exit; and positive externalities in the economy, as the government prefers other goals than profit realization. Government participation is categorized as direct or indirect intervention. We present international studies showing that indirect government intervention can have both beneficial and negative effects on the vc market. Finally, the Hungarian government’s participation and intervention are evaluated on the domestic VC market.

Keywords: venture capital; state involvement; EU funds; seed stage (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.hippocampus.si/ISSN/1854-4231/12.317-331.pdf full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mgt:youmng:v:12:y:2017:i:4:p:317-331

Ordering information: This journal article can be ordered from
http://www.mng.fm-kp.si

DOI: 10.26493/1854-4231.12.317-331

Access Statistics for this article

Management is currently edited by Klemen Kavcic

More articles in Management from University of Primorska, Faculty of Management Koper Contact information at EDIRC.
Bibliographic data for series maintained by Alen Jezovnik ().