سیاست عمومی و ایجاد بازارهای سرمایه گذاری ریسک پذیر فعال

We assess the effectiveness of different public policy instruments for the creation of active venture capital markets. Our methodology focusses on ‘innovation ratios’, defined to be the shares of high-tech, and of early stage, venture capital investments. We study a unique panel of data for 14 European countries between 1988 and 2001. We have several novel findings. First, we find no evidence of a shortage of supply of venture capital funds in Europe, a result which questions the effectiveness of the most widely used policy for fostering active venture capital markets. We also find other policies to be effective. In particular, the opening of stock markets targeted at entrepreneurial companies has a positive, large effect on the innovation ratios. Reductions in the corporate capital gains tax rate increase the share of both high-tech and early stage investment. A reduction in labor regulation also results in a higher share of high-tech investments. Finally, we find no evidence of an effect of increased public R&D spending on the innovation ratios.

Venture capital is a form of financial intermediation particularly well suited to support the creation and growth of innovative, entrepreneurial companies (Hellmann and Puri, 2000, Hellmann and Puri, 2002 and Kortum and Lerner, 2000). It specializes in financing and nurturing companies at an early stage of development (‘start-ups’) that operate in high-tech industries. For these companies the expertise of the venture capitalist, its knowledge of markets and of the entrepreneurial process, and its network of contacts are most useful to help unfold their growth potential (Bottazzi et al., 2005a, Gompers, 1995, Hellmann and Puri, 2002, Lerner, 1994 and Lerner, 1995). By contrast, when venture capital is applied to companies at a later stage of their growth, or in companies which operate in technologically mature industries, it has less of an opportunity to ‘make a difference’ (Michelacci and Suarez, 2004). Economics thus points to the desirability of providing an adequate share of venture investments in high-tech and early stage companies. Such a goal has been shared by public policy, which appreciates the possibility to foster venture capital for achieving economic growth and job creation ((Bottazzi and Da Rin, 2002a and European Commission, 2003). Governments around the world have been trying to replicate the success that venture capital has achieved in the United States (Megginson, 2004). These attempts absorb large sums of public money. Yet, we know very little about what policies can really help create active venture capital markets. Our study contributes a first step towards filling this gap. While we cannot evaluate both the benefits and the costs of alternative policy instruments for active venture capital markets, we can contribute a rigorous assessment of what their impact has been in the recent European experience. We start by discussing the methodological challenges to assessing the effectiveness of alternative public policies for venture capital. We propose an empirical approach which allows to minimize the risk of omitting relevant explanatory variables. This relies on the notion of ‘innovation ratios.’ These are defined to be the ratio of high-tech investments to total venture investments (high-tech ratio), and the ratio of early stage investments to total venture investments (early stage ratio). These ratios are useful for methodological reasons, but also for their substantive meaning: they measure the extent to which venture capital markets are active, i.e., provide support for high-tech and early stage ventures. By looking at the innovation ratios we can better understand how policy can make venture capital markets not only larger but also more effective—i.e., better able to cater to those firms which most benefit from the support of a venture capitalist. Economic analysis has identified several policies as potentially useful for the development of active venture capital markets. For each of them we discuss the predicted effect on the innovation ratios. First, theory suggests that innovative start-ups suffer from credit constraints, and that these constraints are more severe for high-tech and early stage firms. Such constraints may be overcome by public policies which increase the supply of funds available for early stage and high-tech investment. This would stimulate venture investments in high-tech and early stage firms, and so result in higher innovation ratios. The other relevant policies influence the innovation ratios by affecting the expected (after tax, risk-adjusted) return to new ventures. A higher expected return reduces credit rationing and so increases the innovation ratios. Taxation affects the return to investors and entrepreneurs in several ways. A lower corporate capital gains tax increases the return to investors. A lower differential between the personal tax rate and the capital gains tax rate makes leaving a job and become an entrepreneur more attractive. Lower corporate income taxation increases the return to both investors and entrepreneurs by increasing the present value of future (after tax) corporate income. Beyond taxation, the existence of viable exit markets for venture investments also increases the expected return to investors and entrepreneurs. Policies which result in the creation of stock markets suitable for listing entrepreneurial companies are therefore expected to increase the innovation ratios. The expected return to investors and entrepreneurs can also be made higher by policies that increase the stock of R&D, giving rise to technological spillovers, and in turn to valuable entrepreneurial opportunities. Finally, the reduction of barriers to entrepreneurship—such as restrictions to hiring and firing workers—lowers the regulatory costs to entrepreneurial activity. A rigorous, comprehensive assessment of the effectiveness of these interventions can provide useful insights to policy-makers. We take these predictions to the data, and study the experience of 14 European countries between 1988 and 2001 with a panel methodology, using innovation ratios as dependent variables. We introduce for the first time a panel dimension for several measures of taxation, for the existence of stock markets for entrepreneurial companies, and for a measure of hiring and firing restrictions in labor markets. Given the nature of our data, which come from a relatively homogeneous set of developed economies, and the question we want to address, we choose to estimate ‘within-country’ effects. This implies that we can evaluate what governments can do to increase the innovation ratios rather than explain cross-country variation in the values of the innovation ratios. Our results challenge the prevailing policy approach, as we do not find any evidence of a shortage of venture capital funds for European companies: an increase in the supply of funds has no effect on the innovation ratios. Rather, we find that the opening of ‘New’ stock markets for entrepreneurial companies has a large positive impact on both the high-tech and early stage ratios. Our panel setting thus provides support for the importance of creating exit options for venture capital, as suggested by Black and Gilson (1998) and Michelacci and Suarez (2004). Taxation also matters. In particular, a reduction of the corporate capital gains taxation has a positive effect on the innovation ratios; this supports the prediction of Keuschnigg and Nielsen (2004) that lower capital gains taxation stimulates monitoring by venture capitalists by raising the return to their effort. A reduction in hiring and firing restrictions also has a positive effect on the high-tech ratio, while changes in public R&D have no effect on it. Overall, the European experience suggests that the creation of active venture capital markets might depend on providing investors and entrepreneurs with the possibility to reap the benefits of their efforts rather than on providing them with more funds. Our results complement and advance those of previous studies—starting with the seminal contribution of Gompers and Lerner (1998)—and put them on a firmer methodological ground. The rest of the paper is organized as follows. Section 2 describes the challenges in estimating the effects of public policy on venture capital markets, motivates our empirical strategy and choice of policy variables, and describes recent policy programmes for venture capital markets in the European context. Section 3 describes our data. Section 4 reports our results, and is followed by a brief conclusion.

In this paper we use a panel data analysis to study how public policy can contribute to the creation of active venture capital markets. The results we obtain from a panel of European country-level data over 1988–2001 provide new insights on the effectiveness of alternative policies. The prevailing policy approach does not receive support from the data. Our results cast more than a passing doubt on the attempt to increase the share of early stage and high-tech venture investments by channeling more funds into venture capital markets, consistent with a ‘money chasing deals’ situation (Gompers and Lerner, 2000). Rather, we find that policies which increase the expected return of innovative projects are more successful in altering the composition of venture capital markets towards early stage projects and projects in high-tech industries. A reduction in capital gains taxation raises the share of early stage and high-tech investments. The availability of stock markets targeted at entrepreneurial companies—which provide a lucrative exit channel—also has a positive effect on the innovation ratios, while a reduction in barriers to entrepreneurship leads to an increase in the high-tech ratio. Finally, the stock of public R&D holds no effect on the innovation ratios. These results suggest a novel interpretation of the ‘European Paradox’ (European Commission, 1994)—the fact that Europe suffers from an inability to turn scientific competence into commercially successful ventures. In the light of our findings, the Paradox seems to be due not to a lack of funding or of attractive technological opportunities, but rather to the difficulties to earn large profits from the creation of new companies, consistent with recent models of entrepreneurship (e.g., Gromb and Scharfstein, 2002). While we cannot offer a conclusive cost-benefit analysis of alternative policies, our findings on their benefits have implications for policy-makers in countries with emerging venture capital markets. There, the impact of policy early in their development might be particularly important. Even if they reflect the European experience, we believe our results have a clear message: sensible policy should consider a wider set of instruments than simply channeling more funds into venture capital.