Difference between revisions of "Brander Egan Hellmann (2010) - Government Sponsored versus Private Venture Capital"

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Latest revision as of 19:14, 29 September 2020

Article
Has bibtex key
Has article title Government Sponsored versus Private Venture Capital
Has author Brander Egan Hellmann
Has year 2010
In journal
In volume
In number
Has pages
Has publisher
© edegan.com, 2016
With the editors, at the NBER Pre-Conference
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Reference

Brander, James A., Edward J. Egan, and Thomas F. Hellmann (2010), "Government Sponsored versus Private Venture Capital: Canadian Evidence", in "International Differences In Entrepreneurship", J. Lerner and A. Schoar, National Bureau of Economic Research, Cambridge, MA.

@article{brander2010government,
  title={Government Sponsored versus Private Venture Capital: Canadian Evidence},
  author={Brander, James A. and Egan, Edward J. and Hellmann, Thomas F.},
  journal={"International Differences In Entrepreneurship", J. Lerner and A. Schoar, National Bureau of Economic Research, Cambridge, MA.},
  year={2010},
  publisher={National Bureau of Economic Research}
}

File(s)

Status

  • This paper is published in an NBER book ("International Differences In Entrepreneurship", edited by J. Lerner and A. Schoar).
  • This paper was presented at: The NBER pre-conference on International Differences in Entrepreneurship, Boston, Massachusetts (May ‘07)
  • Google Scholar listed 50 cites as of Oct 2013.

Abstract

This paper investigates the relative performance of enterprises backed by government-sponsored venture capitalists and private venture capitalists. While previous studies focus mainly on investor returns, this paper focuses on a broader set of public policy objectives, including value-creation, innovation, and competition. A number of novel data-collection methods, including web-crawlers, are used to assemble a near-comprehensive data set of Canadian venture-capital backed enterprises. The results indicate that enterprises financed by government-sponsored venture capitalists underperform on a variety of criteria, including value-creation, as measured by the likelihood and size of IPOs and M&As, and innovation, as measured by patents. It is important to understand whether such underperformance arises from a selection effect in which private venture capitalists have a higher quality threshold for investment than subsidized venture capitalists, or whether it arises from a treatment effect in which subsidized venture capitalists crowd out private investment and, in addition, provide less effective mentoring and other value-added skills. We find suggestive evidence that crowding out and less effective treatment are problems associated with government-backed venture capital. While the data does not allow for a definitive welfare analysis, the results cast some doubt on the desirability of certain government interventions in the venture capital market.