GOVERNMENT SPONSORED VENTURE CAPITAL FUNDS AND THEIR RELATION TO INNOVATIONS IN LITHUANIAN SMES
Keywords:Government sponsored venture capital fund, innovative Small and Medium Sized Enterprises, public policy
The research shows that the government's role in activating the venture capital market occurs through direct and indirect public policy measures. The government plays an important role in choosing the most optimal public policy measures, focusing on timely economic issues, and in encouraging private investors to invest in industrial sectors where funding shortfall is the greatest.
Studies have shown that the establishment of government sponsored venture capital funds (hereinafter GSVC funds) funds is justified by the following reasons: GSVC funds are an alternative source of capital funding for Small and Medium Sized Enterprises (hereinafter SMEs), they encourage innovation and are focused on job creation and economic growth.
The present paper deals with the government’s role in fostering the government-sponsored venture capital funds particularly focusing on the impact of such funds on innovations in SMEs in Lithuania.
The research shows that it is appropriate to clarify the concept of GSVC funds, focusing on the role of supranational institutions in the establishment of these funds. Thus, GSVC funds in this paper refer to funds accumulated from private investors and public resources (government, as well as other supranational institutions such as the EU), which invest in high growth potential SMEs in their early growth and development stages in order to improve their development conditions in a particular region or country.
The scientific literature research shows that the impact of venture capital on the innovations in SMEs is measured mainly in terms of patents (Chemmanur, Loutskina, & Tian, 2012; Brander et al., 2010; Bertoni & Tykvová, 2012). Thus, it reflects only one – the technological – side of innovations. Meanwhile, considering innovations as multifaceted conception, the organizational innovations, networking, self-assessment and marketing innovations aspects should be taken into account as well.