Does governmental venture capital spur invention and innovation? Evidence from young European biotech companies

Bertoni, Fabio; Tykvová, Tereza

doi:10.1016/j.respol.2015.02.002

Cited by 192 publications

(143 citation statements)

References 72 publications

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“…This evidence is consistent with most of the literature on finance and innovation, for instance, studies of venture capital and innovation, which find that venture capital investments and the frequency with which firms use this type of selective and competitive external financial resource, are generally associated to high innovation potential (Casamatta, 2003;Arqué-Castells, 2012;Bertoni et al, 2015). However, the presence of adequate demand for innovative product is not necessarily guaranteed.…”

Section: Conclusion and Policy Implicationssupporting

confidence: 86%

“…VCs usually prefer to invest in firms with higher innovation potential, although not in basic research or at the beginning of the innovation cycle, confirming that potentially highly innovative firms are more in need of external finance. Other studies show that VC certification, which signals to the market the goodness of the innovation investment, significantly affects recurrent resort to venture capital financing (Bertoni et al, 2015). Overall, this literature finds that external finance is a necessary, but not sufficient condition to ensure successful innovation (Casamatta, 2003).…”

Section: Financing Constraints and Randd Investmentsmentioning

confidence: 98%

“…For instance, if it can be shown that firms do not innovate because they lack liquidity, struggle to access external financial sources or perceive innovation costs as excessive, it is relatively more straightforward for policy makers to alleviate these barriers by providing liquidity. This can take the form of additional subsidies, tax credits or channelling public funds to Venture Capital (VC) to increase (mainly R&D) innovation investments (Arqué-Castells, 2012;Bertoni and Tykvová, 2015).…”

Section: Introductionmentioning

confidence: 99%

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No money, no honey? Financial versus knowledge and demand constraints on innovation

2017

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The paper adds to the literature on the barriers to innovation in two ways. First, we assess comparatively what mostly constrains firms' ability to translate investment in innovation activity into new products and processes, whether it is mainly finance, as most of the literature would suggest, or whether it is mostly knowledge and marketrelated aspects. Second, we suggest a method to correct for the sample selection bias that often affects empirical contributions to this scholarship. By filtering out firms that are not interested in innovation from those that struggle to engage in it, we obtain a relevant sample of potential innovators, which allows us to analyse the comparative effect of financial and non-financial barriers on innovation success. We find that demand-side factors, particularly concentrated market structure and lack of demand, are as important as financial constraints in determining firms' innovation failures. This evidence redirects attention from financial to non-financial barriers by considering traditional demand, market structure and regulation factors involved in reduced firm innovation performance. The empirical analysis is based on an unbalanced panel of firm-level data from four waves of the UK Community Innovation Survey (CIS) between

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Section: Conclusion and Policy Implicationssupporting

confidence: 86%

Section: Financing Constraints and Randd Investmentsmentioning

confidence: 98%

Section: Introductionmentioning

confidence: 99%

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No money, no honey? Financial versus knowledge and demand constraints on innovation

2017

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“…Scholarly evidence indicates that this is a sound decision. For example, Bertoni and Tykvova (2015) document a very positive innovation impact of GVC investments in European pharma and biotech start-ups, but only when the GVC investor enters a syndicate led by a private investor. When GVC investors invest on a stand-alone basis, this positive effect vanishes.…”

Section: An Overview and Comparison Of New Players In Entrepreneurialmentioning

confidence: 99%

New players in entrepreneurial finance and why they are there

et al. 2017

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The landscape for entrepreneurial finance has changed strongly over the last years. Many new players have entered the arena. This editorial introduces and describes the new players and compares them along the four dimensions: debt or equity, investment goal, investment approach, and investment target. Following this, we discuss the factors explaining the emergence of the new players and group them into supply-and demand-side factors. The editorial gives researchers and practitioners orientation about recent developments in entrepreneurial finance and provides avenues for relevant and fruitful further research.

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“…In syndication with private VCs, six related peer-reviewed papers confirm a positive correlation with exits (Brander et al, 2014;, growth of portfolios (Grilli and Murtinu, 2014a;Grilli and Murtinu, 2014b), innovation (Bertoni and Tykvová, 2015) and staging (Brander et al, 2014). On the overview of previous research, it can be noted that many government VCs seem to contribute to less exits of portfolios.…”

Section: Do Government Venture Capitals Contribute To Their Portfolios?mentioning

confidence: 94%

Japanese government venture capital: what should we know?

Kirihata

2018

APJIE

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Purpose The purpose of this paper is to discuss the implication of Japanese government venture capital (VC) policies for future research and to provide basis for policymakers and practitioners. Design/methodology/approach This is an academic literature review of available peer-reviewed publications on government VC policies. This paper discusses and analyses the current state and issues of the Japanese government VC policies regarding three research questions: What do Japanese government VCs do? Do they contribute to their portfolios? and Do they contribute to the development of VC market? Findings There are mainly two findings in this paper: It is effective to establish a complementary relationship with private VCs for Japanese government VCs to contribute to their portfolios; Japanese government should simultaneously continue to make and review policies for the VC market, the stock market, the entrepreneur sector and the environment surrounding them by its strategic long-term commitment to contribute to the development of VC market and new technology-based firms in Japan. Originality/value As there are only a few studies on recently strengthened Japanese government VC policies, this paper provides an in-depth discussion on these Japanese VC policies, which can be used for future research and as a valuable resource for policymakers and practitioners.

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Does governmental venture capital spur invention and innovation? Evidence from young European biotech companies

Cited by 192 publications

References 72 publications

No money, no honey? Financial versus knowledge and demand constraints on innovation

No money, no honey? Financial versus knowledge and demand constraints on innovation

New players in entrepreneurial finance and why they are there

Japanese government venture capital: what should we know?

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