EUROPEAN governments like venture capital: it smacks of innovation, entrepreneurship and growth. And venture capitalists have every reason to like European governments. Of the €4 billion ($5.3 billion) that firms from continental Europe and Britain managed to raise last year—half the 2007 total—around 40% came from government agencies (see chart). That is a big jump from pre-crisis days, when government funds provided 10% of new capital; and a lot more than European private-equity firms, which drew 8% of their funding from public sources in 2011.
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