The impact of government-sponsored venture capital (GSVC) on the performance of Portuguese SMEs

Abstract

This paper studies the impact of financing by a particular set of Government-Sponsored Venture Capital (GSVC) funds, the Revitalizar VC Funds, on the performance of Portuguese SMEs measured by employment, sales and sales to total assets growth. Through an analysis using a control group of non-GSVC-backed SMEs, I conclude that in the short-term GSVC funding seems to hinder efficiency, does not seem to significantly relate to sales growth in high-tech industries and significantly relates to decreases of sales growth in low-tech industries. Contrastingly, GSVC-backed SMEs display a significantly higher performance in terms of employee growth, particularly for the high-tech industries.