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Government as fund-of-fund and venture capital fund sponsors : effect on employment in portfolio companies

Thomas Standaert (UGent) and Sophie Manigart (UGent)
(2018) SMALL BUSINESS ECONOMICS. 50(2). p.357-373
Author
Organization
Abstract
Governments around the world have set up fund-of-fund programs to increase the supply of venture capital financing to young growth-oriented firms. In these programs, a government fund-of-fund acts as limited partner in a venture capital fund. The venture capital investment process is hereby delegated to external investors, which were selected by the government fund-of-fund. We investigate employment growth in 108 portfolio companies that benefited from the ARKimedes fund-of-fund in Flanders. Accounting for the heterogeneity in the types of venture capital investors managing hybrid funds, and the associated goal diversity and resource endowments, we find that portfolio companies backed by hybrid independent venture capital funds show greater employment growth than those backed by hybrid captive or hybrid government venture capital funds. This finding is relevant because it indicates that the financial objectives of hybrid independent venture capital funds are highly compatible with the government’s objective of employment growth, as providing companies with superior monitoring and value adding services with the objective of realizing a successful exit creates employment in the process.
Keywords
Venture capital, Public policy, Hybrid funds, Employment growth

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MLA
Standaert, Thomas, and Sophie Manigart. “Government as Fund-of-Fund and Venture Capital Fund Sponsors : Effect on Employment in Portfolio Companies.” SMALL BUSINESS ECONOMICS, vol. 50, no. 2, Springer, 2018, pp. 357–73, doi:10.1007/s11187-016-9833-7.
APA
Standaert, T., & Manigart, S. (2018). Government as fund-of-fund and venture capital fund sponsors : effect on employment in portfolio companies. SMALL BUSINESS ECONOMICS, 50(2), 357–373. https://doi.org/10.1007/s11187-016-9833-7
Chicago author-date
Standaert, Thomas, and Sophie Manigart. 2018. “Government as Fund-of-Fund and Venture Capital Fund Sponsors : Effect on Employment in Portfolio Companies.” SMALL BUSINESS ECONOMICS 50 (2): 357–73. https://doi.org/10.1007/s11187-016-9833-7.
Chicago author-date (all authors)
Standaert, Thomas, and Sophie Manigart. 2018. “Government as Fund-of-Fund and Venture Capital Fund Sponsors : Effect on Employment in Portfolio Companies.” SMALL BUSINESS ECONOMICS 50 (2): 357–373. doi:10.1007/s11187-016-9833-7.
Vancouver
1.
Standaert T, Manigart S. Government as fund-of-fund and venture capital fund sponsors : effect on employment in portfolio companies. SMALL BUSINESS ECONOMICS. 2018;50(2):357–73.
IEEE
[1]
T. Standaert and S. Manigart, “Government as fund-of-fund and venture capital fund sponsors : effect on employment in portfolio companies,” SMALL BUSINESS ECONOMICS, vol. 50, no. 2, pp. 357–373, 2018.
@article{8500153,
  abstract     = {{Governments around the world have set up fund-of-fund programs to increase the supply of venture capital financing to young growth-oriented firms. In these programs, a government fund-of-fund acts as limited partner in a venture capital fund. The venture capital investment process is hereby delegated to external investors, which were selected by the government fund-of-fund. We investigate employment growth in 108 portfolio companies that benefited from the ARKimedes fund-of-fund in Flanders. Accounting for the heterogeneity in the types of venture capital investors managing hybrid funds, and the associated goal diversity and resource endowments, we find that portfolio companies backed by hybrid independent venture capital funds show greater employment growth than those backed by hybrid captive or hybrid government venture capital funds. This finding is relevant because it indicates that the financial objectives of hybrid independent venture capital funds are highly compatible with the government’s objective of employment growth, as providing companies with superior monitoring and value adding services with the objective of realizing a successful exit creates employment in the process.}},
  author       = {{Standaert, Thomas and Manigart, Sophie}},
  issn         = {{0921-898X}},
  journal      = {{SMALL BUSINESS ECONOMICS}},
  keywords     = {{Venture capital,Public policy,Hybrid funds,Employment growth}},
  language     = {{eng}},
  number       = {{2}},
  pages        = {{357--373}},
  publisher    = {{Springer}},
  title        = {{Government as fund-of-fund and venture capital fund sponsors : effect on employment in portfolio companies}},
  url          = {{http://doi.org/10.1007/s11187-016-9833-7}},
  volume       = {{50}},
  year         = {{2018}},
}
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