Emerging trends in government venture capital policies in smaller peripheral economies: Lessons from Finland, New Zealand, and Estonia

Abstract

Emerging trends from the developing venture capital industries of three smaller peripheral economies (Finland, New Zealand, and Estonia), demonstrate that government policy can overcome scale and distance barriers to assist in establishing venture capital to support innovative potential high growth ventures. Eight common policy themes for successful venture capital development are: new venture stimulation; dedicated finance policy institutions; stable, internationally harmonized tax and regulations; business angel development; inward investment; international venture capital fund development; smooth pipeline of investment; effective investment exit market. Venture capital policy development themes are interconnected, requiring a holistic ecosystem approach. A blueprint for successful small peripheral economy venture capital development requires an initial phase of new venture demand stimulation and ensuing simultaneity of policies to engineer venture capital development. This paper presents a unique insight into government strategies to develop VC in three SPEs-Finland, New Zealand, and Estonia. It demonstrates emerging trends for what is working well or less well at different stages of the national VC development (Avnimelech, Kenney, & Teubal, 2005;Avnimelech & Teubal, 2006). This contemporary review and critique of government VC policy provides a theoretical VC ecosystem development framework for the study. The paper then discusses the lessons learned from the three SPEs and presents a blueprint for SPE governments to develop more cohesive and comprehensive ecosystem for sustainable VC.

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“…Owen and Mason () address the issues for VC development of small scale and peripherality from VC concentrations experienced by emerging and developing smaller economies such as Finland, New Zealand, and Estonia. Using a case study approach, they find common good practice themes which have underpinned their successful VC development.…”