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  • 2021
  • Working Paper
  • HBS Working Paper Series

The Dance Between Government and Private Investors: Public Entrepreneurial Finance around the Globe

By: Jessica Bai, Shai Bernstein, Abhishek Dev and Josh Lerner
  • Format:Print
  • | Language:English
  • | Pages:80
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Abstract

This paper examines the interaction between governments and private capital investors when financing early-stage ventures. We first provide a simple conceptual framework to explore when collaboration between governments and private investors is likely to emerge. Using hand-collected data on 755 programs worldwide, we find that government programs frequently involve private capital investors. Collaboration is greater when governments are more effective, when programs target earlier-stage companies, and when the local private venture market is more developed. Such collaborations mostly occur through joint equity investments and matching-funds requirements. These findings underscore the importance of government synergies with local private capital markets.

Keywords

Public Entrepreneurship; Subsidy; Industrial Policy; Entrepreneurship; Public Sector; Financing and Loans; Venture Capital; Global Range

Citation

Bai, Jessica, Shai Bernstein, Abhishek Dev, and Josh Lerner. "The Dance Between Government and Private Investors: Public Entrepreneurial Finance around the Globe." Harvard Business School Working Paper, No. 21-120, April 2021. (Revised January 2022.)
  • SSRN
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About The Authors

Shai Benjamin Bernstein

Entrepreneurial Management
→More Publications

Josh Lerner

Entrepreneurial Management
→More Publications

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More from the Authors
  • The Diffusion of New Technologies By: Aakash Kalyani, Marcela Carvalho, Nicholas Bloom, Tarek Hassan, Josh Lerner and Ahmed Tahoun
  • Healthcare Provider Bankruptcies By: Samuel Antill, Ashvin Gandhi, Jessica Bai and Adrienne Sabety
  • Private Equity and Workers: Modeling and Measuring Monopsony, Implicit Contracts, and Efficient Reallocation By: Kyle Herkenhoff, Josh Lerner, Gordon M. Phillips, Francisca Rebelo and Benjamin Sampson
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