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Interest in venture capital markets continues to be of relevance to politicians and policy makers, recognizing the importance of government participation in venture capital market development. Yet advice regarding developing venture capital markets appears increasingly disparate. The paper aims to discuss these issues.

The authors engage the assumptions that underpin three dominant policy approaches to the development of venture capital markets with regard to the role of governments in that process. The authors categorize existing empirical studies against three approaches and give examples of the different government policies associated with the various approaches.

Direct and indirect approaches recognize the importance of active stock markets but largely ignore the dynamic processes of markets, asserting that the provision of capital, institutional changes, and financial incentives ex ante will cause a positive market reaction, regardless of the market’s context. The recent timed approached is purported as being more comprehensive in its awareness of the need to adapt to countries’ contexts and the need for varying policies at the different stages of market emergence.

Limited empirical research tests the voracity and limitations of the timed approach. The challenge in doing so is that evolutionary theories typically explain an event after it has occurred, thus its predictive power is often limited. Future research might investigate the efficacy of policy levers based on the timed approach.

The authors highlight the need for the development of venture capital markets, rather than a venture capital industry.

The authors extend the existing venture capital market development categories and evaluate each approach in terms of the efficacy of government’s roles in venture capital market development in light of the existing evidence of economic development and entrepreneurial activity.

There is arguably a balance between exploration and exploitation within a commercial organization which leads to sustainable growth and value creation. Exploratory activities are associated with search, innovation, risk-taking and experimentation. Activities, such as selection, implementation and execution are considered exploitative in nature. We show that the governance structures and mechanisms that are typically employed in venture capital-backed companies ensure an optimum balance between the exploratory behavior of entrepreneurs and the exploratory focus of venture capitalists. New players in the venture capital cycle, such as crowdfunding platforms and corporate venture capital units, often fail to understand the importance of the interaction and interrelation between the apparently opposing exploratory and exploitative activities. However, collaborative venture capital models that are currently emerging appear to restore the necessary equilibrium in the “new” venture capital cycle.

The purpose of this paper is to investigate how the venture capital industry evolves in Korea. The paper also compares the venture capital industry growth of Korea with that of the USA.

This paper forecasts the growth of the Korean venture capital industry using the Bass Model. The authors apply the Bass Model to both Korean and US data to compare the model estimates of Korean and US data, and to make use of the US case by taking the “guess by similarity” approach to analyze Korean venture capital industry growth.

The authors find that the innovative fund inflows in Korea are stronger than those in the USA, while inertial reinvestments are weak. The study forecasts that new investments in Korea grow at a 5-7 percent rate each year for the next five years, and the growth rate slows down over time. Peak investment is predicted around the year 2030.

Based on the forecasted venture capital investment schedule each year, this study derives the fundraising schedule and the implications for Korea fund-of-funds management to match the investment schedule.

The model estimates provide a guideline for forecasting venture capital industry development in countries with brief histories of venture capital, which lack data. The analysis can also be applied to cases when developing countries and emerging financial markets assess the impact of government interventions on venture capital industry growth, especially when they provide fund-of-funds.

How does venture capital (VC) emerge in emerging and developing economies? This paper aims to use case data from an early Russian VC fund to extend a previous model exploring that question.

Case studies of VC emergence from South Africa, Botswana, and Russia are compared, from which a conceptual model is developed.

VC emerges in a process consisting of four stages: enabling, coproducing, diffusing, and replicating. The Russian case shows that these stages are linked in a circular process, i.e. replicating can lead to enabling. VC emergence can also begin at any stage. A higher degree of public‐private coproduction may outweigh the absence of a completed enabling stage, suggesting that strength in one stage can compensate for weakness in others.

This paper invites scholars to reconsider VC emergence in a more nuanced manner that takes into account its complex, processual nature. The inclusion of Russian data also encourages researchers to examine more closely the subtle ways in which the private and public sectors may interact in emerging markets in pursuit of common goals. This study's findings have important linkages with other critical accounts of international business. The study addresses weaknesses in earlier literature by employing a multi‐disciplinary, cross‐context approach that utilizes data from a foreign VC investing in Russian small to medium‐sized enterprises.

VCs considering investment in Russia should examine how early entrants to the industry formed cooperative relationships with local governments. Policymakers should re‐examine the relative importance of national and local efforts to promote VC and other innovation‐related initiatives in emerging markets.

This study moves beyond current economics‐dominated understanding of VC, which focuses on antecedents (enabling conditions). It reports the central role of public‐private coproduction in VC emergence, the feedback between diffusion and coproduction in emergence, and, most importantly, the diminished importance of enabling conditions. This paper presents the first fund‐level study of Russian VC.

The purpose of this paper is to examine the impact of human and intellectual capital on start-ups’ attainment of government venture capital (GVC). It is theorized that as a result of government predisposition toward enhancing knowledge spillover and certifying underinvested start-ups, different types of human and intellectual capital possessed by start-ups will distinctly affect GVC funding.

The Kauffman Firm Survey, a panel data set of 4,928 new US firms over a five-year period (2004-2008), serves as the data source. Ordinary least squares regression, coupled with generalized estimating equations to check for robustness, is used to determine the effect of human and intellectual capital on GVC funding.

Founders’ educational attainment has a greater impact than their occupational experience in GVC funding. While the number of patents owned by the start-up increases GVC funding, the number of trademarks and copyrights negatively influence GVC funding.

By distinguishing between different aspects of human and intellectual capital, this study provides a more nuanced understanding of the influence of new venture resources in the context of GVC.

This study seeks to examine the peculiarities of the venture capital market in China and seeks to compare it with Western markets.

The paper provides insights based on both the practitioner and academic literature in the field.

It is noted that different cultural norms, corporate governance structures, a lack of appropriate exit strategies, and governmental intervention are important factors that set the markets apart and should be taken into consideration when making venture capital investments in China.

The paper should be of interest to practitioners considering investing in China and to academics doing research in this area.

The paper is to the best of the authors' knowledge the first to provide a detailed and comprehensive review of the Chinese venture capital market.

The purpose of this paper is to discuss the implication of Japanese government venture capital (VC) policies for future research and to provide basis for policymakers and practitioners.

This is an academic literature review of available peer-reviewed publications on government VC policies. This paper discusses and analyses the current state and issues of the Japanese government VC policies regarding three research questions: What do Japanese government VCs do? Do they contribute to their portfolios? and Do they contribute to the development of VC market?

There are mainly two findings in this paper: It is effective to establish a complementary relationship with private VCs for Japanese government VCs to contribute to their portfolios; Japanese government should simultaneously continue to make and review policies for the VC market, the stock market, the entrepreneur sector and the environment surrounding them by its strategic long-term commitment to contribute to the development of VC market and new technology-based firms in Japan.

As there are only a few studies on recently strengthened Japanese government VC policies, this paper provides an in-depth discussion on these Japanese VC policies, which can be used for future research and as a valuable resource for policymakers and practitioners.

Access to finance appears to be the largest challenge for entrepreneurial firms from the small to medium‐sized enterprise (SME) sector in Poland. To address this concern, the government embarked on a program to yield financial and know‐how assistance to the SME sector. The purpose of this paper is to evaluate public intervention in this area.

The study focuses on the analysis of primary data. The sampling frame for the study consisted of 278,088 firms from the SME sector in the Warsaw region. The sample size was equal to 500 firms from the SME sector. Questionnaires from 262 respondents were included in the study, for an effective response rate of 52 percent.

The study concludes that there are still pronounced liquidity gaps for firms in the SME sector in Poland and that the government programs are not effective in closing these liquidity gaps.

Problems with access to capital continue to be a challenge to developing a vibrant SME sector in Poland and a lack of access to capital is consistently quoted as the major obstacle to the development of the SME sector in Poland. The paper offers three policy recommendations in relation to closing liquidity gaps in the SME sector.

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.

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.

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.

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.

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.

The purpose of this paper is to focus on the possibilities and limitations of venture capital formation in Bosnia and Herzegovina and Macedonia where there has been a lack of success and benefits of small- and medium-sized enterprises (SMEs) from this type of financing.

The paper provides a rationale for specific methodological choices and justifies its choice. Both quantitative and qualitative methods were employed. The methods section (research design) explains the entry criteria for the study population, specific imaging techniques and methods of data analysis.

Venture capital invest in companies in the beginning to achieve an above average return on investment. Unfortunately, there are no officially registered venture capital funds in Bosnia and Herzegovina. For the venture capital funds to operate, it is necessary to adopt regulations governing this area, to create a favorable tax system and introduce a cash basis for VAT calculation for SMEs. The majority of respondents in the research believe that in the establishment of venture capital funds would provide one of the greatest supports by the governments of these countries, analyzing the economic situation in these countries, it is apparent that there is an under-developed legal and tax system, which does not support SMEs. In order to attract foreign and domestic investors, and form venture capital funds, it is necessary to create a favorable business environment.

The paper contains novel information and insight into VC funds in two transition economies of Bosnia and Herzegovina and Macedonia.