CEU Electronic Theses and Dissertations, 2021
| Author | Bodisz, Aron |
|---|---|
| Title | Does the Government Have a Place in the VC Business? A Hungarian Case |
| Summary | In my thesis I study the role of state funds in the venture capital (VC) sector, how their funding structure differs from non-state backed (or private) VC funds' and the positive effects their special structure can potentially have on the start-up sector. I build on a theoretical model of Ewens, Jones and Rhodes-Kropf (2013) who use the principal-agent problem to show how the funding structures of venture capital funds influence their investment choices. I use their model to show why the state VC fund may overcome the principal-agent problem and non-government backed VC funds not. The model suggests that the state VC fund is willing to invest in lower net present value and/or riskier projects of firms. I take the theory to a company level data set and show empirical evidence to support its implications. I use a staggered diff-in-diff method to show that the performance of state VC-backed firms is significantly lower on average compared to their non-state VC-backed counterparts. I also show that on average the state VC fund invests in riskier firms. For that purpose I also use a regression where my outcome variable is a modified version of the index of dispersion. In light of these findings I argue that a state VC fund can be (socially) beneficial for a country as it might fund projects that are unattractive for private VC funds but still potentially generate a positive return. |
| Supervisor | Lychagin, Sergey |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2021/bodisz_aron.pdf |
Visit the CEU Library.
© 2007-2021, Central European University