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Which form of venture capital is most supportive of innovation?

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  • Bertoni, Fabio
  • Tykvová, Tereza

Abstract

Although there seems to be consensus in the literature that venture capital investors increase the innovation output of their portfolio companies, there is little evidence about how investor type (governmental vs. private) and transaction structure (syndicated vs. non-syndicated) moderate this impact. Using a sample of 865 young biotech and pharmaceutical companies from seven European countries, we investigate which form of venture capital is most supportive of innovation. Our results suggest that in companies financed by syndicates and by private venture capital investors, the innovation output increases significantly faster than in non-venture-backed companies. The most supportive form is a heterogeneous syndicate (i.e., consisting of both types of venture capital investors) led by a private investor.

Suggested Citation

  • Bertoni, Fabio & Tykvová, Tereza, 2012. "Which form of venture capital is most supportive of innovation?," ZEW Discussion Papers 12-018, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:12018
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    Citations

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    Cited by:

    1. Kraemer-Eis, Helmut & Botsari, Antonia & Gvetadze, Salome & Lang, Frank & Torfs, Wouter, 2017. "European Small Business Finance Outlook: December 2017," EIF Working Paper Series 2017/46, European Investment Fund (EIF).
    2. Massimo G. Colombo & Douglas J. Cumming & Silvio Vismara, 2016. "Governmental venture capital for innovative young firms," The Journal of Technology Transfer, Springer, vol. 41(1), pages 10-24, February.
    3. Kraemer-Eis, Helmut & Botsari, Antonia & Gvetadze, Salome & Lang, Frank & Torfs, Wouter, 2018. "European Small Business Finance Outlook: June 2018," EIF Working Paper Series 2018/50, European Investment Fund (EIF).
    4. Karsai, Judit, 2015. "Állami szerepvállalás a kelet-közép-európai kockázatitőke-piacon
      [The role of government in the Central and East European venture-capital market]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1172-1195.
    5. Kraemer-Eis, Helmut & Lang, Frank & Torfs, Wouter & Gvetadze, Salome, 2017. "European Small Business Finance Outlook: June 2017," EIF Working Paper Series 2017/43, European Investment Fund (EIF).
    6. Kraemer-Eis, Helmut & Lang, Frank & Torfs, Wouter & Gvetadze, Salome, 2016. "European Small Business Finance Outlook: June 2016," EIF Working Paper Series 2016/35, European Investment Fund (EIF).
    7. Kraemer-Eis, Helmut & Lang, Frank & Torfs, Wouter & Gvetadze, Salome, 2015. "European Small Business Finance Outlook: December 2015," EIF Working Paper Series 2015/32, European Investment Fund (EIF).
    8. Judit Karsai, 2015. "Are CEE states successful as venture capitalists?," IEHAS Discussion Papers 1539, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.

    More about this item

    Keywords

    innovation; patents; private venture capital investors; governmental venture capital investors; syndication; biotech and pharmaceutical companies; Europe;

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • H0 - Public Economics - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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