Hungarian venture capital fund managers’ view on the JEREMIE venture capital program

Abstract

THE AIM OF THE STUDY

The presentation of the related investment community’s opinion on the usefulness and conditions of the JEREMIE venture capital program in order to substantiate new venture capital schemes to be introduced during the 2014-2020 planning period in Europe.

APPLIED RESEARCH METHOD

Questionnaire survey on the usefulness and conditions of the JEREMIE program among Hungarian fund managers involved in early-stage venture capital investments.

RESULTS AND NOVELTIES OF THE STUDY

Survey results show that the success of government sponsored venture capital programs require more than simple creation of the supply side. Namely, success depends not only on the volume of capital the state can provide for this purpose, and on the applied scheme of the program, but also on the government’s involvement in the preparation of the companies to receive venture capital. A further lesson of the survey is that transparency can be the only guarantee against abuses, which were also mentioned by many fund managers in their responses. Transparency is especially important in the selection of the intermediary fund manager companies participating in the scheme. Lack of the publicity of government-sponsored venture capita! programs’ data also prevents the evaluation of the success of the programs, including the verification of the usefulness of public participation. It also hinders making any objective decision on the continuation of the government involvement in the venture capital market. However, the role of the state on the venture capital market can obviously be only a temporary one, as venture capital investments are essentially market activities.

PRACTICAL / ECONOMIC POLICY SUGGESTIONS

The continuation of the role of the state as venture capital funds’ investor in the new planning period is a precondition for the successful exit of funds from their portfolio companies already financed under the JEREMIE program. The state, however, has to take part in the pre-incubation stage to help potential portfolio companies to become investment ready. And last but not least, state participation on the venture capital market should be characterised by a high degree of transparency.