At this years World Economic Forum, the Global Economic Impact of Private Equity Report 2010 was published. A part of this report presents a recent study by professor James Brander: "Governments as venture capitalists: Striking the right balance"

Professor Brander's study investigates government support for venture capital, and the performance of companies that are backed by capital from the government. The authors have analyzed 28 800 companies in the period between 2000 and 2008, and compares the performance of companies that are backed by government venture capital (GVC) with that of companies supported by private venture capitalists (PVC). The study presents several interesting findings:

- If you look at value creation, companies with moderate GVC support outperforms companies with extensive government support and companies based entirely on private funding. The study uses three different measures of value creation: Number of successful exits, the exit value and the total amount of venture capital invested.

- One important reason for the government to invest in venture capital, is to promote innovation. The study finds that companies with moderate GVC support have a higher level of patent activity, than companies supported by private venture capital.

- Direct provision of venture capital through government-owned venture capital funds appears to be a less successful method for value creation than other policies. Government investment in independently managed venture capital funds or a provision of subsidies or tax concessions to venture capitalists, seems to have  higher impact on value creation.