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VC Policy: Moving from a Financial Perspective towards a Systemic and Evolutionary Framework


Many VC policies in Europe up to and including the 1990s took a "static" financial view of VC that focused on bridging financial gaps rather than creating of a new mechanism to assure the emergence of higher forms of organization, such as a cluster or a market. Following the weak impact of some of these policies, we propose that a new systemic and evolutionary framework can be useful for both real world ("positive") analysis and policy ("normative") analysis.

This policy brief discusses the framework's theoretical foundations. We argue that the success of VC policies depends on factors such as the phase of evolution of (i) VC or related innovation finance organizations; (ii) the underlying segment of startup companies and of high tech industries; and(iii) the specific regional institutional setting. Thus, while in some contexts it may be worth targeting a new VC industry/market (and associated high-tech clusters), in others VC policy should focus on improving pre-emergence conditions.

The new framework is shaped by (i) a multidimensional view of VC; (ii) strong interaction between VC policy and the development of high-tech clusters; and (iii) a strategic approach to policy.