Whether the government or markets, or a mixture of both, can be efficient and effective incentives for the promotion of entrepreneurship and new venture financing is an age old question. Public funding efforts are controversial and in most cases they tend to fail. In the United States can be traced back to at least the Great Depression and the period immediately after the Second World War, debate over the role of the state in these areas, the question was of particular concern. Policy ma … Read more »

Whether the government or markets, or a mixture of both, can be efficient and effective incentives for the promotion of entrepreneurship and new venture financing is an age old question. Public funding efforts are controversial and in most cases they tend to fail. In the United States can be traced back to at least the Great Depression and the period immediately after the Second World War, debate over the role of the state in these areas, the question was of particular concern. Policy makers believe that existing financial institutions the necessary due diligence could not have the pool of risk capital needed to promote entrepreneurial ventures was. In addition, there were calls for additional incentives in the form of tax incentives. The mechanisms that have been used raise questions about benefits, costs and unintended consequences. Can and should the government influence entrepreneurial activity and venture financing? What are the limits of government intervention?
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Josh Lerner,
Tom Nicholas
13 pages.
Release Date: 28, October 2012. Prod #: 813096-PDF-ENG
The government’s role in the early development of American Venture Capital HBR case solution

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