Public Venture Capital, Occupational Choice, and Entrepreneurship

Abstract

New businesses face constraints in the form of limited access to capital and managerial expertise. Many governments have developed public venture capital programs for the purpose of easing these constraints and assisting young firms in generating growth in output and employment. The paper develops a model that incorporates occupational choice and informational asymmetries with regard to the ability of entrepreneurs and supply of effort, and determines the optimal supply of entrepreneurship, financial assistance, and managerial advice provided by a public venture capital program.

Liquidity gaps in financing the SME sector in an emerging market: evidence from Poland

“…SMEs are vulnerable and very few manage to survive more than five years. Public authorities throughout the world, perhaps recognizing both the importance and frugality of the SME, have created agencies and set up numerous business support and assistance measures (Di Giacomo, 2004; Secrieru and Vigneault, 2004; Karsai, 2004; Mason and Harrison, 2004a) to help the sector obtain better access to finance and to encourage business formation. These government programs generally focus on specific industrial sectors such as manufacturing, agriculture, and mining (Guijarro et al , 2009; Snaith and Walker, 2005); different types of business activities such as export, innovation, research, and development (Guijarro et al , 2009; Avnimelech and Teubal, 2008); the provision of financing through credit guarantee programs, public venture capital funds, and micro‐lending agencies (Hughes, 2009); and assisting firms to become investment ready (Mason and Kwok, 2010; Oakey, 2007; Mason and Harrison, 2004b).…”

Why Do Contracts Differ Between VC Types? Market Segmentation Versus Corporate Governance Varieties

“…Not only in Continental European countries, such as France, Belgium, Italy and Germany, but also in the US 2 and in particular in Canada 3 , the share of public VCs is significant. Secrieru and Vigneault (2004) display an exception to the general neglect of public VCs in the literature. They investigate the role of public VCs and ask for the optimal level of advice which should be provided by the public VC.…”

New technology-based firms in Europe: market penetration, public venture capital, and timing of investment

“…Further, PUVC managers may not be even greatly stimulated in improving their skills, given their "fixed" pay structure. Third, PUVCs are less able to tightly monitor their portfolio companies than PRVCs (Secrieru and Vigneault, 2004). In fact, PUVCs use less sophisticated corporate governance mechanisms as well as less voting rights than PRVCs (Hirsch and Walz, 2013).…”