Direct and Indirect Government Venture Capital Investments in Europe

This paper provides evidence of the broad government presence in the European venture capital industry. Two forms of intervention are considered: first, direct stand-alone government venture capital funds and, second, indirect private funds to which governments commit funds as limited partners. The overall government presence seems to be much more important than previously documented, as we find that the government intervenes, on average, in 42.2% of venture capital investments in Europe. We also show that European countries are heterogeneous in their use of these two channels, and we consider possible early explanations for this choice of policy mix. Lastly, we provide some evidence on the consequences of these policies in terms of SME's perceived access to financing.