Public versus private venture capital: seeding or crowding out? A pan-European analysis

Leleux, Benoı̂t; Surlemont, Bernard

doi:10.1016/s0883-9026(01)00078-7

Cited by 287 publications

(221 citation statements)

References 17 publications

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“…Bank-related and government-related PE firms are more prominent in Belgium than in other European countries. These two types of investors are typically assumed to be less actively involved with their portfolio companies (Leleux and Surlemont, 2003). The fact that we nevertheless find significant effects, despite their potentially lower involvement on average, enhances the strength of the findings.…”

Section: Conclusion and Discussionsupporting

confidence: 53%

“…The impact of a PE investor may depend on its experience or portfolio strategy. Further, Leleux and Surlemont (2003) suggest that different types of PE investors typically have different investment horizons, investment goals and incentives, which potentially affect their involvement in their portfolio firms. Bank-related and government-related PE firms are more prominent in Belgium than in other European countries.…”

Section: Conclusion and Discussionmentioning

confidence: 99%

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Financial Reporting Quality in Private Equity Backed Companies: The Impact of Ownership Concentration

Beuselinck

Manigart

2007

Small Bus Econ

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ABSTRACT. We empirically show on a sample of 270 unquoted, private equity backed companies that the shareholder structure of private companies impacts the quality of their publicly available accounting information. More precisely, companies in which private equity (PE) investors have a high equity stake produce lower quality accounting information than companies in which PE investors have a low equity stake, after controlling for factors like company size and age. We explain our findings by arguing that PE investors with low equity stakes have a higher need for high quality accounting information whereas PE investors with high equity stakes have other means to closely monitor their portfolio companies.

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Section: Conclusion and Discussionsupporting

confidence: 53%

Section: Conclusion and Discussionmentioning

confidence: 99%

Financial Reporting Quality in Private Equity Backed Companies: The Impact of Ownership Concentration

Beuselinck

Manigart

2007

Small Bus Econ

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“…At the region level, for instance, the study by Cumming and Macintosh (2006) analyzes the effects of a Canadian tax-driven venture capital vehicle (LSVCC) on the supply of private venture capital funds in different Candian geographic regions. At the country level, the work of Leleux and Surlemont (2003) investigates the effects of publicly sponsored or managed venture capital funds in the development of national venture capital markets in 15 European countries.…”

Section: How To Assess the Impact Of Public Venture Capital Programmementioning

confidence: 99%

Assessing the impact of public venture capital programmes in the United Kingdom: Do regional characteristics matter?

Munari

Toschi

2015

Journal of Business Venturing

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Over the last two decades, many governments around the world have implemented programmes to mobilize venture capital (VC) in support of new and innovative firms. In this paper, we analyze whether and how the impact of publicly-supported VC funds varies between high-tech and low-tech regions, when compared to private VC funds. Our analyses on a sample of 898 VC-backed companies in the United Kingdom in the period 1998-2007 show for public VC funds: (a) a greater propensity to invest in early-stage and technology-based sectors, which is especially pronounced in low-tech regions; (b) a greater propensity toward staging and a greater ability to attract partners in syndication, especially in high-tech regions; (c) lower exit rates of investee companies, in terms of IPO/acquisition, as compared to private VC funds. Overall, our findings confirm that regional characteristics do matter if we want to more rigorously assess the effectiveness of public VC programmes.

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“…Public participation in venture capital schemes always carries the potential for abuse (Florida and Smith, 1993;Leleux et al, 1998). As a consequence of personal and political ties, and intentional abuse, the preferences many times do not reach the intended beneficiary companies, and so public funds are spent without any benefit to society as a whole.…”

Section: Selection Of Private Fund Managersmentioning

confidence: 99%

“…It intends to contribute to the ongoing international debate (Colombo et al, 2014;Cumming et al, 2014;Leleux et al, 1998;Lerner 2002Lerner , 2009Lerner , 2010Meyer, 2007;Murray et al, 2012) by presenting the experiences gained in the Central Eastern European region. It looks to answer the question of how successful the use of EU funds for venture capital purposes was in the Central Eastern European region, with a less developed venture capital market to begin with, and to what extent the lessons learned from the earlier public equity schemes in countries with more advanced venture capital sector could be exploited.…”

Section: Introductionmentioning

confidence: 99%

Are CEE States Successful as Venture Capitalists?

Karsai

2015

SSRN Journal

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The entire venture capital sector of Central and Eastern Europe is characterised by the increased weight of state resources. The strengthening of public activities is mainly due to the new type of equity schemes introduced in the European Union's 2007 to 2013 programming period, which allowed the countries in the region to use part of the Structural Funds to develop their venture capital sector. More than 60 venture capital funds undertook to invest more than EUR one billion by the end of 2015, by raising one third of the funds from private investors. The paper examines how successful the CEE EU Member States, with a relatively less developed venture capital industry, were in using government equity schemes based on market cooperation between the state and market actors. Since, due to the shortness of the time elapsed since launching these schemes, the success of the companies financed by such hybrid venture capital funds cannot be assessed, this paper primarily aims to analyse whether the region was able to utilise the past lessons from government equity schemes in countries with a more developed venture capital industry. Similarly to the equity programs applied in the West, the government venture capital programs in the region are also characterised by the short time frame, the mass of administrative requirements tying the hands of investors, the small fund size, which prevents efficient operation, and the limited participation of institutional investors amongst private investors. Compared to developed countries, the unjustified level of benefits to and non-transparent selection of private fund managers and the immaturity of the investment proposals constitute disadvantages in the region. However, the greatest risk of public equity schemes, i.e. the crowding out effect on private investors, is missing in the CEE region due to the lack of market investors.

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Public versus private venture capital: seeding or crowding out? A pan-European analysis

Cited by 287 publications

References 17 publications

Financial Reporting Quality in Private Equity Backed Companies: The Impact of Ownership Concentration

Financial Reporting Quality in Private Equity Backed Companies: The Impact of Ownership Concentration

Assessing the impact of public venture capital programmes in the United Kingdom: Do regional characteristics matter?

Are CEE States Successful as Venture Capitalists?

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