Towards a Systemic and Evolutionary Framework for Venture Capital Policy

  • Alessandro Rosiello
  • Gil Avnimelech
  • Morris Teubal
Conference paper


When compared to the U.S. and Israel, the weak venture capital (VC) markets and VC policy in Europe up to the early 2000s stimulated two alternative streams of research. A majority view, which we term traditional, focuses on the role of VC in overcoming market failure in the financing of innovative ventures. The policy recommendations emerging from this view involve a mix of monetary incentives and institutional changes that can be applied irrespective of the local context. The second is an evolutionary perspective on VC and VC policy. This is based on a dynamic analysis of the co-evolution between VC and high-tech entrepreneurship, as well as an adaptive view of policy and policymaking (Metcalfe 1994). In this setting, policy-makers have to overcome not only market failure but also dynamic system failure associated with the linked emergence of entrepreneurial high-tech clusters. Overcoming traditional market failure becomes a necessary but not sufficient pre-emergence condition for the eventual attainment of the latter policy objectives. This paper surveys the post-2,000 literature on VC and VC policy and criticizes some of its assumptions and results. Moreover, it examines the Israeli and UK/Scotland innovation policy frameworks from an historical perspective, which allows us to highlight differences in approaches and impacts. The upshot is that the success of VC policies depends on a number of factors, including the phase of emergence of a VC market and high-tech cluster and the specific country/region institutional setting.


Venture Capital Market Failure Private Equity Venture Capital Investment Venture Capital Fund 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2011

Authors and Affiliations

  • Alessandro Rosiello
    • 1
  • Gil Avnimelech
    • 2
  • Morris Teubal
    • 3
  1. 1.ESRC Innogen CentreUniversity of EdinburghEdinburghUK
  2. 2.Department of Public PolicyUniversity of North Carolina at Chapel HillChapel HillUSA
  3. 3.Department of EconomicsHebrew UniversityJerusalemIsrael

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