Zigzag of luck

Introducing the entrepreneurial talent as a factor of production along with land, labor and capital, Schumpeter ever adopted the role of business in economic growth. At the same time, Keynes opened the world's eyes to another important component of economic development - part of the state. The debate over the optimal combination of these two forces have long outgrown the walls of academia and went into practice. Beware - Nouveau! Modernization as idee fixe of the whole state can indeed give interesting results. At least in terms of venture capital activity explosion there. Some venture capital funds in the middle of 2010 in Russia, there were about fifty of the total volume of assets exceeding $ 2 billion, If you look at a decade ago, the increase in activity is not obvious: the funds in 2001, Russia had about the same amount of funding and was 2 times higher. However, considering that after the fall of the market shares of technology companies to global venture capital market in 2009 has recovered to only 25% of the pre-crisis level, price will become clear, even small, but the separation from the global trend. The U.S. and Europe with respect to recovery of investments in 2000 is even less - 22.7 and 22.9% respectively. However, interest percentages, but in absolute terms to us as industry giants to the moon. For example, venture capital funds managed by the U.S. is more than $ 20 billion That's President Medvedev of Russia at the beginning of the year turned to American capitalists to support the emerging sector of innovation in our economy, stating that "venture capital there are not enough." A cocktail of capital. If you go back to Schumpeter to Keynes, the synthesis of their ideas is the creation of public funds involved in the support of venture capital projects. In Russia, for example, that the Russian Venture Company, established in 2006, Singapore - EDB Investments. Meanwhile, according to a study commissioned by the National Bureau of Economic Research, United States (NBER) *, the result of government involvement in the venture capital is far from unambiguous. After processing the data on more than 20 thousand projects in 25 countries, researchers concluded that the dependence of the success of the project on the fraction of state participation is nonlinear. With a small and significant participation of the state probability of project success decreases, but increases with the equal participation of private capital. It is worth noting that a successful researchers understood the situation, when the company finally conducted IPO, enabling "get" the original investors a profit. Representativeness of the sample can only envy: coverage by geography (U.S., Europe, Asia - developed and developing countries) and time period (2000-2008.) Eliminates much of the potential flaws of panel data. The absence of linear dependence of economists see that part of the state capital can to some extent reverse the agent's risk, the propensity for high risk projects which is a hallmark of venture capitalism. Investors and managers may be experiencing problems with the urgency of purpose: because the manager will arrange a quick return, but rather an investor expects to work in "long", and control of the state is able to reconcile them. On the other hand, the creator of the project can submit it to the investor in the most favorable light, and access to information throughout the state can reduce risks. As an alternative hypothesis explaining the high probability of success of the project with state participation, known as the state's ability to determine at a later stage of the project and the likelihood of success known to participate only in the favorites. However, the hypothesis was not confirmed - in the vast majority of successful projects with state funding 'from above' began from the very start, "embryonic" stage of the process. Revealing and raw data themselves. Thus, the highest proportion of successful projects that provided a "way out" of the original investors in Canada and Hong Kong - 21.78% and 20% respectively, the lowest - in the Netherlands (6.13%) and Belgium (8%). However, the impact of membership in a particular country on the outcome of the project by the researchers rejected. 20/80 rule. Empirically derived rule of Pareto, stating that 20% of actions provide 80% result, and found its application in the field of venture capital investments. Here, however, it has a slightly modified but still recognizable form of the 10 projects 3 will cause damage, 3 will be released "at zero", 3 will bring a little income and will sverhdohodnost. To hunt for this latest project with the whole idea of ​​government funding and afoot. But as it turned out, the ability to locate these projects in the state has its limits. Studies have shown that despite the seemingly attractive idea of ​​government funding of venture capital investments, crowding out (crowding out effect) has not been canceled. It is usually demonstrated through higher interest rates as a result of state activity on domestic debt market. In the case of public financing venture projects the situation is somewhat different - an inherent inability of officials enough to respond quickly to a large flow of the proposed investment result, the quality of the selected ideas in the period of high competition is quite low. Is not the case in which due to the economic downturn reduced the total amount of proposed capital - a leisurely selection plays into the hands of the fund, allowing you to receive "tasty" projects. The results showed that the state's share in the projects initiated in periods of recession, is 11.24%, whereas during the boom, it drops to 7.35%. The performance also speaks for itself: the proportion of successful projects during the recession than in the boom period - 17% compared to 14.8%. Given the importance of venture capitalism, declared, understood the state's role as a counter-cyclical investor, designed to keep the process of innovation in business. In 2007, the global venture capital market was concluded 5188 transactions, after 2 years this number had fallen to 3835 - the lowest level for at least the past 10 years. Interestingly, however, noted that the market decline occurred precisely at the expense of the quantitative components. Average transaction amount in 2007, declined slightly - from $ 8.8 million to $ 7.7 million fish or fishing rod. The course of the privatization of state assets has been widely reported in recent years, reflecting not only the need to finance the state budget expenditures, but also change at the point of view on the role of government in the economy. Go to the participation of the state only as a guarantor in a number of socially important sectors such as electricity, was quite painless. It turns out that the establishment of the market operating rules of the game makes it unnecessary to direct state presence in the capital of many companies. A similar idea has been tested in the above-mentioned study: what form of government support is more effective - direct participation in equity or venture capital firms for the establishment of certain parameters of a number of benefits, such as taxation. Sections of the project with state support for those who are directly controlled by the state, and those that are indirectly sponsored by the budget, the study authors concluded that the probability of successful launch of the IPO companies have more of the second type. Thus, the importance of the institutional component of the venture business, which allows to support the project without affecting the ownership structure of the company. The basis can be taken as a model of incentives used in the United States. By the way, that's where the share of public financing venture projects is one of the lowest among developed countries - 4.53%. The rest of the world, it at least three times, and in Canada and does exceed 50%. In the meantime, the imperfection of Russian legislation on a broad front of issues covering the sector, leaving room for improvement, starting with changing the legal form of venture capital funds themselves, and ending with the modifications to the rights and responsibilities vechurnyh companies. The bottom line. It turns out that the state's role in venture capitalism is different from the role of government in the economy according to Keynes: the growth of spending in a crisis, decline - a period of growth. On the one hand, the status can neutralize a number of risks associated with the asymmetry of information. On the other hand, counter-cyclical nature of investment to stabilize the state sector during periods of falling economic activity. It turns out that the private and public capital in the venture business are interchangeable, and the state owns the role of sort of an insurer willing to take on the role of the private sector in case of crisis. In Russian conditions it encounters a number of limitations, the most important of which is the low diversification of the economy. According to the "Finance." The situation with the richest men in the country, that is, potential investors in risky projects that have almost reached the pre-crisis level, but when the rating of Russian billionaires and the largest companies in Russia revolves around commodities trading, falling oil prices are equally clean out his pockets and business angels, and the state. All that remains in this case - again invite foreign investors. * James A. Brander, Qianqian Du, Thomas F. Hellmann THE EFFECTS OF GOVERNMENT-SPONSORED VENTURE CAPITAL: INTERNATIONAL EVIDENCE (University of British Columbia, Shanghai Advanced Institute of Finance), NBER working paper 16 521, November 2010.