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Direct and indirect effects of private- and government-sponsored venture capital

Author

Listed:
  • Erik Engberg

    (The Swedish Agency for Growth Policy Analysis)

  • Patrik Gustavsson Tingvall

    (The Swedish Agency for Growth Policy Analysis
    Södertörn University)

  • Daniel Halvarsson

    (The Ratio Institute)

Abstract

Starting from the discourse on the impact of private and governmental venture capital investments, we examine the effects of different types of venture capital on firms’ sales, employment and investment. Our results show that both private and governmental venture capital investments boost firm sales with a delay of 2–3 years. The results suggest that VC impacts sales primarily through efficiency gains and to some extent, investments in physical capital investments, whereas no employment effects can be traced. Finally, we find indications of governmental VC investors being more prone to make follow-up investments in stagnating, non-growing firms than private investors.

Suggested Citation

  • Erik Engberg & Patrik Gustavsson Tingvall & Daniel Halvarsson, 2021. "Direct and indirect effects of private- and government-sponsored venture capital," Empirical Economics, Springer, vol. 60(2), pages 701-735, February.
    • Handle: RePEc:spr:empeco:v:60:y:2021:i:2:d:10.1007_s00181-019-01770-w
    DOI: 10.1007/s00181-019-01770-w
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    More about this item

    Keywords

    Venture capital; Start-ups; Firm growth; Investments; Governmental venture capital;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets

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