A new theoretical model of government backed venture capital funding

Fazekas, Balázs; Becsky-Nagy, Patrícia

doi:10.1556/032.2021.00024

Cited by 4 publications

(5 citation statements)

References 57 publications

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“…The function of the incentives built into the HGVC is to bridge the gap of the expected and perceived return that private investors associate with the targeted firms. If the incentive scheme, investment policy and transparency of agendas are not regulated properly, in the short run, the inconsistency of HGVCs might lead to an even higher misallocation of capital than GVCs (Fazekas and Becsky-Nagy, 2021). In hybrid schemes, the problem of the double principle–agent relationship described by Sahlman (1990) is further aggravated by inconsistencies amongst private and public participants that lead to higher exposure to moral hazards.…”

Section: Discussionmentioning

confidence: 99%

“…Owen and Mason (2019) consider the setting up of hybrid funds managed by market investors to be a cornerstone of ideal public-backed VC schemes. On the other hand, hybrid schemes are more exposed to agency problems, which can reduce their effectiveness (Fazekas and Becsky-Nagy, 2021). We address the question of whether a hybrid government-backed scheme is more efficient compared to pure government VC funding via Hungarian evidence.…”

Section: Introductionmentioning

confidence: 99%

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Spurring entrepreneurship with public venture capital in developing industries – evidence from Hungary

Becsky-Nagy

Fazekas²

2023

JEEE

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Purpose Venture capital (VC) is an essential element in healthy entrepreneurial environments; therefore, many countries in developing entrepreneurial economies support the industry via direct or indirect government interventions. The purpose of this study is to examine through the example of the Hungarian market, whether direct or hybrid state involvement has contributed more to the growth of the invested enterprises. The findings are relevant in the design of government VC schemes and in the contracts mitigating the moral hazards inherent in government funding. Design/methodology/approach The basis of empirical research is a unique hand-collected database covering Hungarian government-backed VC (GVC) investments. Based on the financial data of investee firms, the authors investigate whether firms financed by hybrid VC involving market participants are able to outperform firms that receive pure public financing using panel regression. Findings Based on Hungarian evidence, hybrid VC-backed firms generated lower growth and employment than their purely government-backed peers. Both schemes showed meagre innovation activity. The conclusion is that because of the conflict of private and economic policy objectives in hybrid financing, the exposure of hybrid risk capital to moral hazard is higher than that of pure public financing. Private interests in hybrid funds can only improve investment efficiency if they are structured along the lines of market-based independent financial intermediation and the contracts imitate the ones existing amongst limited and general partners in private schemes. Research limitations/implications The research covers the data of Hungarian government-backed firms by tracking the full range of 86 investments made in the purely government scheme and 340 firms that received funding in the hybrid scheme. The research focuses on two government initiatives, and the results are influenced by the specific regulation of the programs; therefore, the results cannot be generalized for all government agendas; they are indicative in the designs of the agendas. Originality/value There is a limited number of empirical studies investigating the impact of VC in developing markets, especially in the Central and Eastern Europe region. This firm-level research on the impact of public VC can help improve the effectiveness of development policies. By analysing the entirety of investments of a VC program that is near to its completion, the authors provide new insight into the efficiency and prospects of GVC schemes in the region.

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Spurring entrepreneurship with public venture capital in developing industries – evidence from Hungary

Becsky-Nagy

Fazekas²

2023

JEEE

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“…Since the financial crisis, there has been an increasing body of literature investigating credit shocks. The funding problems after the financial crises led to a number of government backed capital schemes aiming to provide financial engineering solutions for companies, especially for small‐ and medium‐sized enterprises (Fazekas & Becsky‐Nagy, 2021). Gambetti and Musso (2017) discuss the role of credit supply shocks in the business cycles suggesting that credit supply shocks have a growing and significant impact, and their role is even more apparent in times of recession.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

Accelerate or brake?—The connection of credit gaps and economic disequilibrium

Fazekas,

Póta,

Becsky‐Nagy

2024

Strategic Change

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Credit supply shocks significantly aggravate the impact of economic recessions. Understanding the underlying reasons why credit market shocks occur and detecting the market turbulences in time can give a decision support tool for the economic policy to intervene more efficiently on the market and to reduce the effect of economic downturns. The goal of the current article is to investigate the factors that signal possible credit shocks by analyzing the quarterly data of 17 European countries over the period 1995–2021. The focus of the article is on the credit given to the nonfinancial corporations. In our analysis, we have built on the credit gap methodology by determining the deviations of the lending activity from its trend, and then we have modeled these credit gaps using fundamental macroeconomic indicators, such as the balance of the current account, the ratio of short‐ and long‐term capital investments and government debt. Our conclusion is that in the presence of fundamental disequilibrium in the economy excessive lending creates positive credit gaps that increase the chance of negative credit market shocks. According to our new findings, the existing credit gap methodology can be improved by incorporating real economic factors; slowing long‐term capital investment and increasing the deficit of the current account signal the emergence of a credit gap. We found significant regional heterogeneity as in Southern European countries, and the credit gaps were more substantial. Among the investigated macroeconomic factors, the governmental indebtedness was especially high in these countries suggesting that countries with high public debt rates are more prone to develop credit gaps.

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“…Ilyen tényező például lehet az ügyfél lista, a nagy piaci részesedés, a márka név vagy a vevői hűség is. Egy külső befektető bevonásakor akár a vállalkozásban, illetve az ágazatban rejlő piaci potenciál indokolhatja azt, hogy a növekedési lehetőségek reményében kedvezőbb cégértékelést ad egy kompetens befektető, ami különösen tökéletlen piacok esetében eltérő lehet [8]. A cégértékelést ugyanakkot azok a nem pénzügyi hozzáadott értéket jelentő szolgáltatások is befolyásolhatják, amit a vállalkozás befektetői értéknövelé tételként képesek lesznek nyújtani a vállalkozás számára [2].…”

Section: Bevezetésunclassified

Az intellektuális tőke mérési lehetőségei egy vállalati példán keresztül

Váradi,

Hamad

2024

economica

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Our research aims to examine the “invisible value” found at UPC Magyarország Kft. Since Vodafone Magyarország Nyrt. announced the acquisition of UPC Magyarország Kft. in 2020. Our research is aimed at using different methods to determine the invisible assets, intellectual capital, and added value, which cannot be determined directly from the financial statements of UPC Magyarország Kft. Since the financial statements prepared based on accounting principles follow the principle of prudence, many assets (mainly intangible assets) are not shown in the financial statements, so they only become visible after the moment of acquisition. Three different methods were used to measure intellectual capital, then the results were compared. The three methods use different points of view to measure intellectual capital and approach the concept of intellectual capital from other points of view. The CIV method shows us the lack of intellectual capital in relation to the industry or the surplus value; The EVA indicator explicitly shows us the intellectual capital size; and the VAIC method the efficiency of intellectual capital.

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A new theoretical model of government backed venture capital funding

Cited by 4 publications

References 57 publications

Spurring entrepreneurship with public venture capital in developing industries – evidence from Hungary

Spurring entrepreneurship with public venture capital in developing industries – evidence from Hungary

Accelerate or brake?—The connection of credit gaps and economic disequilibrium

Az intellektuális tőke mérési lehetőségei egy vállalati példán keresztül

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