Investment or Learning Curve? – The effects of EU and government funds on the development of the Hungarian venture capital market

Abstract

With the appearance of the Jeremie venture capital programme in 2010, financed by EU and Hungarian government funds, a highly crucial factor of the start-up ecosystem received funds of approximately HUF 130 billion. The present paper examines how effective the Hungarian venture capital market can be in enhancing the financing prospects of young and innovative firms through the increase of government and EU resources, and what opportunities and limits the government’s participation in the venture capital market provides. Our conclusion is that the Jeremie programme could be a forward-thinking initiative towards an efficient venture capital market, which in turn is an essential element of creating successful startups at an industry level, but at the same time, the development of the ecosystem surrounding affected businesses is also necessary in the long run. Taking the characteristics and features of this ecosystem into consideration enables us interpret the development as well as the limits of the Hungarian venture capital market.