Small Business Economics

, Volume 38, Issue 3, pp 283–301 | Cite as

The capital gap for small technology companies: public venture capital to the rescue?

  • Itxaso del-Palacio
  • Xiaotian Tina Zhang
  • Francesc Sole


In this paper, we analyze effectiveness of public intervention for fostering private venture-capital market in Spain. We use a sample obtained from VentureXpert database, consisting of 755 investments made by 83 Spanish public and private venture capitalists that closed at least one fund between 1997 and 2008. We compare the investments undertaken by private and public investors before and after public venture capital programs were started. We found that Spanish venture-capital market has rapidly developed in the last 10 years and that this development coincides with the establishment of public policies for encouraging technology entrepreneurship. We also found that other factors, such as previous experience of investors and size, have also contributed to fostering more high-risk investments. These results may encourage governments in other countries to start or keep working to promote private venture-capital investments.


Venture capital Early stage Start-up Public policy Entrepreneurship 

JEL Classifications

G24 L24 


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Copyright information

© Springer Science+Business Media, LLC. 2010

Authors and Affiliations

  • Itxaso del-Palacio
    • 1
  • Xiaotian Tina Zhang
    • 2
  • Francesc Sole
    • 3
  1. 1.Imperial College LondonLondonUK
  2. 2.Saint Mary’s College of CaliforniaMoragaUSA
  3. 3.Innova Program for Entrepreneurship, Technical University of CataloniaBarcelonaSpain

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