THE RATIONALITY FOR GOVERNMENT SPONSORED VENTURE CAPITAL FUNDS IN LITHUANIA: INNOVATION PERSPECTIVE
Keywords:Government sponsored venture capital fund, innovative Small and Medium Sized Enterprises, public policy
AbstractIt is widely accepted that early stage SMEs encounter many obstacles which restrict their innovation performance. Limited access to finance is considered as the key obstacle for business development in its early stage. Market failures emerging due to lack of risk capital provision to early stage firms are one of most popular rationality for governments’ intervention in the venture capital market. Following this purpose many countries around the world are launching various public policy schemes in order to diminish lack of supply of capital to early stage SMEs, for instance Yozma in Israel, SBIC in U.S., Labour Sponsored Venture Capital Corporation in Canada and etc. In this paper we refer to government sponsored venture capital fund as a venture capital fund raised from public and private sources in order to meet public policy objectives – to create favourable environment for early stage business development and to give an impetus for innovation creation potential in SMEs.
Competitiveness of Nations in Global Economy