Companies that received some government support outperformed those backed purely by private venture capital in recent years, according to new research that conflicts with recent reports by other bodies.
Enterprises that received up to half of their venture capital funding from governments outperformed rivals backed purely by private venture capital and also those with over 50% of government backing; both in terms of value on exit and patent creation, according to a report published today by the World Economic Forum, the Switzerland-based, non-profit foundation.
The report's authors – James Brander and Thomas Hellmann of the University of British Columbia and Qianqian Du at Shanghai Jiao Tong University – wrote: “In small amounts, government-supported venture capitalists can address obvious market failures and improve economic outcomes [by] picking the low-hanging fruit. In large amounts, however, GVCs may simply compete with, and crowd out private venture capitalist activity”.
Original Article: Government-backed venture capital funds outperform rivals
