Direct and indirect effects of private- and government-sponsored venture capital

Starting from the discourse on the impact of private and governmental venture capital investments, we examine the effects of different types of venture capital on firms’ sales, employment and investment. Our results show that both private and governmental venture capital investments boost firm sales with a delay of 2–3 years. The results suggest that VC impacts sales primarily through efficiency gains and to some extent, investments in physical capital investments, whereas no employment effects can be traced. Finally, we find indications of governmental VC investors being more prone to make follow-up investments in stagnating, non-growing firms than private investors.