Public Policy for Start-Up Entrepreneurship with Venture Capital and Bank Finance
Author | : Christian Keuschnigg |
Publisher | : |
Total Pages | : 0 |
Release | : 2009 |
Genre | : |
ISBN | : |
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Many of today's successful technology firms started out as venture capital (VC) backed firms.The ventures of today are expected to play a key role in the continuance of technological innovation.Thus, the focus here is on strategic policies aimed at promoting innovative businesses and on the validity of using a microeconomic model as the basis of VC-supported entrepreneurship. Many empirical studies are presented to demonstrate the importance of venture capital as opposed to bank finance.The framework of analysis is discussed, including exploration of the market structure, the formal framework as influenced by factors including demand, bank finance, and venture capital, the key margins, and the public policies.Various policies are analyzed regarding their effectiveness and potential distortions. Based on this analysis, several policies endorsing venture capital support are presented, as are the effects of future policy reform.Considering all the evidence, it is proposed that a selective tax break on capital gains, along with a tax on start-up investment costs for VC backed firms, be provided to act as an incentive for firms to provide consistent VC support.With continued, consistent VC support, firms are more likely to be successful.A discussion of the model-based analysis used in is also provided. (AKP).