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

Jáki, Erika ORCID: and Molnár, Endre Mihály (2021) Venture capital and government involvement from a qualitative systematic literature review perspective. Acta Oeconomica, 71 (4). pp. 645-663. DOI

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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 preseed 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.

Item Type:Article
Uncontrolled Keywords:venture capital, government, state, startup financing, GVC
JEL classification:G24 - Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
G31 - Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
G38 - Corporate Finance and Governance: Government Policy and Regulation
L26 - Entrepreneurship
Subjects:Business economics
Public administration
ID Code:7072
Deposited By: MTMT SWORD
Deposited On:12 Dec 2021 20:19
Last Modified:12 Dec 2021 20:19

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