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The Dance Between Government and Private Investors: Public Entrepreneurial Finance around the Globe

Author

Listed:
  • Jessica Bai
  • Shai Bernstein
  • Abhishek Dev
  • Josh Lerner

Abstract

This paper examines the interaction between governments and private capital investors when financing early-stage ventures. We first provide a simple conceptual framework to explore when collaboration between governments and private investors is likely to emerge. Using hand-collected data on 755 programs worldwide, we find that government programs frequently involve private capital investors. Collaboration is greater when governments are more effective, when programs target earlier-stage companies, and when the local private venture market is more developed. Such collaborations mostly occur through joint equity investments and matching-funds requirements. These findings underscore the importance of government synergies with local private capital markets.

Suggested Citation

  • Jessica Bai & Shai Bernstein & Abhishek Dev & Josh Lerner, 2021. "The Dance Between Government and Private Investors: Public Entrepreneurial Finance around the Globe," NBER Working Papers 28744, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:28744
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    Cited by:

    1. Xiang Gao & Zhenhua Gu & Shuzhen Niu & Sunghan Ryu, 2022. "Effects of International Tourist Flow on Startup Financing: Investment Scope and Market Potential Perspectives," SAGE Open, , vol. 12(4), pages 21582440221, October.
    2. Berger, Marius & Hottenrott, Hanna, 2021. "Start-up subsidies and the sources of venture capital," Journal of Business Venturing Insights, Elsevier, vol. 16(C).
    3. Steven Poelhekke & Benjamin Wache, 2023. "The Impact of Venture Capital on Economic Growth," Tinbergen Institute Discussion Papers 23-050/VIII, Tinbergen Institute.

    More about this item

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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