Government venture capital (GVC)-supported firms consistently outperform private venture capital (PVC)-backed companies in key financial, innovation, and corporate responsibility metrics. Research by Jiu-jin Li et al. highlights that GVC-backed firms excel in R&D investment, return on assets (ROA), Tobin’s Q (a measure of market valuation), and corporate social responsibility (CSR) efforts, making them more attractive to investors and more likely to achieve successful public market debuts.,One of the key advantages of GVC-backed firms is their enhanced focus on long-term value creation, particularly in research and development (R&D). Unlike private VC firms that may prioritize short-term profitability and exit strategies, GVC investors often support mission-driven, high-impact innovation, particularly in strategic industries such as clean energy, healthcare, and advanced technology. This commitment to sustained R&D investment strengthens a company’s competitive advantage and increases its attractiveness for follow-on funding.,Financially, GVC-backed firms demonstrate stronger performance in return on assets (ROA) and Tobin’s Q, indicating higher efficiency in asset utilization and better market valuation relative to their replacement costs. These advantages make them more appealing to institutional investors and private venture funds looking for long-term value creation. Additionally, these firms tend to attract more follow-on venture capital investments, further enhancing their growth potential.,From a capital market perspective, companies with GVC backing also tend to achieve higher one-day returns at IPOs compared to those backed by private VC (PVC) or foreign corporate VC (FCV). This suggests that public markets view GVC-backed firms as lower risk, more stable, and more strategically aligned with national economic priorities, driving stronger demand for their shares upon listing.,Perhaps most notably, GVC-backed firms lead in corporate social responsibility (CSR) initiatives, outperforming both PVC- and FCV-backed firms. This can be attributed to governmental influence in prioritizing sustainable and ethical business practices, aligning with broader policy objectives in areas like environmental sustainability, social impact, and governance transparency. Strong CSR performance not only enhances a firm’s reputation and stakeholder trust but also makes it more attractive to ESG-conscious investors and institutional funds.,Overall, these findings reinforce the strategic value of GVC funding, not just in providing financial capital, but in driving long-term innovation, corporate responsibility, and superior market performance. By fostering technological advancement, economic resilience, and sustainable business practices, GVC-backed firms demonstrate stronger investment potential and long-term success compared to those supported by traditional private venture capital.,

This paper is crucial for understanding the strategic advantages of government venture capital (GVC) funds and their role in enhancing entrepreneurial success and economic impact. By demonstrating that GVC-backed firms consistently outperform those supported by private venture capital (PVC) in key financial, innovation, and social responsibility metrics, the study provides strong evidence of the policy efficacy of government-backed funding programs.,One of the most significant findings is that GVC-backed firms excel in research and development (R&D) investment, a crucial driver of technological advancement and long-term competitiveness. Unlike private venture capital firms, which often prioritize short-term financial gains and exit opportunities, government-backed investors focus on sustaining innovation in strategic industries, such as clean energy, biotechnology, and advanced manufacturing. This long-term support fosters an ecosystem of breakthrough innovations that might not receive sufficient funding in a market-driven VC environment.,Beyond innovation, GVC-backed firms also exhibit superior financial performance, particularly in Return on Assets (ROA) and Tobin’s Q, which measure asset efficiency and market valuation relative to a firm’s replacement cost. These metrics indicate that government-backed firms manage their resources more effectively and are perceived as more valuable by investors, making them attractive targets for follow-on funding from institutional and private investors.,Another key insight from the study is the strong corporate social responsibility (CSR) efforts of GVC-supported companies. Unlike traditional venture-backed firms, which may focus primarily on profitability, GVC-backed firms align with broader governmental objectives, ensuring that their business models incorporate sustainability, ethical governance, and social impact initiatives. This makes them particularly appealing to environmental, social, and governance (ESG)-focused investors, further enhancing their ability to attract capital and build long-term trust with stakeholders.,The paper also highlights the higher follow-on investment and stronger IPO performance of GVC-backed firms, reinforcing their attractiveness in public markets. Companies with GVC support not only attract more venture capital in later funding rounds but also experience higher first-day IPO returns, suggesting greater market confidence and investor demand when these firms go public. This superior market reception signals that GVC-backed firms are perceived as more stable and strategically aligned with long-term economic and technological priorities.,Ultimately, this research underscores the effectiveness of GVC funds in fostering high-impact entrepreneurship, providing a valuable framework for policymakers, investors, and startup ecosystems looking to refine support strategies and optimize funding structures. By leveraging the advantages of GVC funding—strong R&D investment, enhanced financial performance, superior CSR efforts, and better capital market outcomes—governments and investors can play a pivotal role in driving sustainable innovation, economic growth, and social progress.,