# Governments intervene in almost half of all European venture capital investments
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2019-01-05
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: European Governments Dominate Venture Capital Investments
Meta Description: New research by emlyon business school reveals European governments intervene in 42.2% of all venture capital investments, boosting access to finance
URL: https://financedigest.com/governments-intervene-almost-half-european-venture-capital-investmentshtml

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European  governments intervene in almost half of all venture capital investments for entrepreneurs, according to new research from emlyon business school.

The researchers, Yan Alperovych and Anita Quas, Professors in Finance at emlyon business school, and their colleague from Ghent University, wanted to gain a panoramic view of the European venture capital market, and determine the influence that governments had on investments.

Using four separate investment databases, the researchers reviewed 55,000 individual venture capital investments, spanning across 25 separate European countries between the years 1997-2015. The researchers then identified whether these [investments came from privately-owned firms](https://www.financedigest.com/toshiba-in-talks-with-four-investment-firms-for-strategic-ideas-sources.html "Toshiba in talks with four investment firms for strategic ideas -sources"), government-owned firms (GVCs) or privately-owned firms which had government limited partners (GLPs).

It appears that government presence in the European [venture capital](https://www.financedigest.com/italys-brembo-sets-up-venture-capital-arm-to-invest-in-tech-startups.html "Italy’s Brembo sets up venture capital arm to invest in tech startups") market was much higher than previously documented. In fact, the researchers found that in an average year European government bodies were involved in 42.2% of all venture capital investments – with GVCs making up 12.5% and GLPs making up 29.7% of these.

The [researchers also found that of both GVC and GLP channels](https://www.financedigest.com/gamers-spend-twice-as-long-viewing-intrinsic-in-game-ads-compared-to-other-digital-channels-reveals-new-research-from-lumen-and-anzu.html "Gamers Spend Twice As Long Viewing Intrinsic In-Game Ads Compared To Other Digital Channels, Reveals New Research From Lumen and Anzu") of investment, it was only the GLP channel which had actually significantly improved companies and entrepreneurs’ access to finance.

Yan Alperovych said,

‘This government intervention is an attempt to correct the equity gap problem – assuming there is one of course.This problem [emerges due to the lack of funding](https://www.financedigest.com/where-can-you-start-building-your-emergency-funds.html "Where Can You Start Building Your Emergency Funds?") for entrepreneurs whose projects may be too opaque or potentially morally hazardous. Hence,the government steps in to [fund these projects instead or along with other investors](https://www.financedigest.com/credit-suisse-to-repay-further-750-million-to-greensill-linked-fund-investors.html "Credit Suisse to repay further 0 million to Greensill-linked fund investors"). This is, arguably, good for ventures which most likely would have been turned down by private firms – now they actually have an increased chance to gain funding through government initiatives.’

Government intervention in this market being actually higher than previously documented implies that we need to re-evaluate the government’s [role and implications in terms of the broader economic](https://www.financedigest.com/bank-of-england-names-former-goldman-economist-pill-to-top-economics-role.html "Bank of England names former Goldman economist Pill to top economics role") consequences for ventures. For the future, however, the [research shows that governments seem to learn](https://www.financedigest.com/we-researched-dfinitys-internet-computer-and-this-is-what-we-learned.html "We Researched Dfinity’s Internet Computer and This Is What We Learned") or at least evolve in their approaches to how they structure their VC initiatives.

_If you would like some more information, or to speak with Yan Alperovych or Anita Quas, please do get in touch with Peter Remon, at BlueSky PR_ [_peter@bluesky-pr.com_](mailto:peter@bluesky-pr.com)


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