Government interventions in the venture capital market - How JEREMIE affects the Hungarian venture capital market?

GOVERNMENT INTERVENTIONS IN THE VENTURE CAPITAL MARKET – HOW JEREMIE AFFECTS THE HUNGARIAN VENTURE CAPITAL MARKET? Balázs Fazekas Uni e si y o Deb ecen, Depa men o Applied Economics and Ru al De elopmen , Facul y o Accoun ing and Finance, Deb ecen, Hunga y azekas.balazs@ag .unideb.hu Abs ac : JEREMIE (Join Eu opean Resou ces o Mic o o Medium En e p ises) p og am was implemen ed as a pa o he EU cohesion policy in he amewo k o 2007-2013 p og amming pe iod. The p ima y objec i e o he p og am was o enhance he inancing p ospec s o SME’s h ough s uc u al unds ha p o ide inancial enginee ing ins umen s like loan, gua an ee and en u e capi al. This pape ocuses on he e ec s o JEREMIE on Hunga y’s en u e capi al ma ke . Since 2010, 28 JEREMIE backed en u e capi al unds we e ounded in ou ounds and 130 billion HUF capi al was alloca ed in o hese unds wi h he con ibu ion o Hunga ian go e nmen . A well-es ablished en u e capi al ma ke can boos en ep eneu ship and inno a ion, he e o e economic g ow h which is he ounda ion o go e nmen in ol emen . On he o he hand, he e is an ex ensi e li e a u e highligh ing he limi s and possible d awbacks o he ac i e ole o public sec o in he en u e capi al ma ke . The e is a consensus in he li e a u e ha in he long un he ex ensi e ole o go e nmen in en u e capi al indus y is coun e p oduc i e. Subs i u ing ma ke pa icipan s by go e nmen agencies will ha dly esul in a compe i i e and e icien ma ke . Howe e , empo a ily as a ca alys public sec o can con ibu e o he de elopmen o en u e capi al ma ke . Di ec go e nmen in e en ion suppo able empo a ily only in he in ancy o he indus y. The p ima y objec i e o e e y p og am mus be o de elop he ma ke o he le el whe e i becomes sel -sus aining. This way he success o hese p og ams mus no be measu ed only by he amoun o in es ed capi al, inancial pe o mance o en u e capi al unds and en u e capi al backed companies. Raising p i a e sec o awa eness and he p og ess o necessa y ins i u ions a e also he c i e ia o a success ul p og am. Du ing he design and implemen a ion o en u e capi al agendas hese aspec s mus be aken in o conside a ion. This pape aims o e alua ing how success ul JEREMIE p og am is in enhancing he de elopmen o en u e capi al indus y. Keywo ds: en u e capi al; go e nmen in e en ion JEL classi ica ion: G24 1. Why should and why shouldn’ he public sec o play a ole in VC ma ke ? Ven u e capi al (VC) and p i a e equi y (PE) indus y in Hunga y eme ged in he ea ly 1990’s sho ly a e he economic ansi ion and de eloped a a s eady pace. In e ms o in es ed capi al Hunga ian p i a e equi y indus y was well-de eloped compa ed o EU and Cen al and Eas e n Eu opean coun ies. Howe e , his ac was led by buyou s; adi ional VC in es men s mean only a iny ac ion o he p i a e equi y ma ke . This pape ocuses on adi ional VC, he equi y-like inancing o young and inno a i e en e p ises by ins i u ional in es o s. Financing o he ea ly s ages o hese en e p ises ia VC had allen a below he EU a e age in Hunga y be o e he JEREMIE backed VC unds appea ed in 2010. The inancing o hese young inno a i e i ms wi h g ea g ow h po en ial plays a c ucial ole in he de elopmen o a heal hy en ep eneu ial sec o , bu as a esul o he special cha ac e is ics o hese en e p ises, he necessa y inancial sou ces a e no always a ailable o hem. Sze b (2006) shows ha , i ms in di e en s ages o hei li e ha e access o di e en ypes o inancial esou ces, and hei demand o inance inc eases apidly a special poin s. Financing gaps occu when he e a e no enough unds o inancing i ms ha ha e g ea g ow h po en ial, a a gi en s age o hei li e. These gaps usually occu a seed, ea ly and ea ly expansion s ages and a s a up companies (Nagy, 2004). One eason o insu icien unds o young and inno a i e i ms is ha he 3F ( amily, iends and ounde s) doesn’ ha e he necessa y esou ces o inance he u he de elopmen o hei company, bu hey a e no sui able o bank inancing. They don’ ha e colla e als, hei capi aliza ion is low compa ed o hei inancial needs and hey don’ ha e any ack eco d. The impe ec ions o ma ke can also lead o he lack o inancial supply o s a up i ms. These impe ec ions a e he mo al haza d p oblems desc ibed by Jensen and Meckling (1976) and asymme ic in o ma ion demons a ed i s by Ake lo (1970). Figu e 1: Ven u e capi al in es men s in Eu opean coun ies as a pe cen age o GDP (2007-2012) Sou ce: EVCA (2013 Figu e 1. shows he VC in es men s as a sha e o GDP in 22 Eu opean coun ies in he 2007-2012 pe iod. Acco ding o i s a io o he GDP, VC played he mos impo an ole in he No he n Eu opean coun ies and accoun ed o only 0,01% - 0,03% in he Cen al and Eas e n Eu opean coun ies be o e he ecession a 2008. In he gi en pe iod in co ela ion wi h he o al in es men s, VC dec eased in e e y coun y excep o Hunga y. This asse class p o ed o be e y sensi i e o economic cycles; in a e age i dec eased almos by 50% om 2007 o 2012. Con a y o he declining Eu opean end, in Hunga y VC in es men s inc eased o 0,066% o he GDP which was he highes a io in 2012 in Eu ope. The cause o his p o-cyclical mo emen in case o Hunga y is he inc easing ole o public sec o 0,00% 0,02% 0,04% 0,06% 0,08% 0,10% 0,12% 0,14% Hunga y Bulga ia Czech Republic Romania Poland Ge many Aus ia Belgium F ance Luxembou g Ne he lands Swi ze land Spain Po ugal I aly G eece Sweden No way Finland Denma k I eland Uni ed Kingdom 2007 2008 2009 2010 2011 2012 in VC indus y and he appea ance o EU’s inancial sou ces in he o m o JEREMIE VC unds. The impo ance o VC in enhancing inno a ion and his way i s spu ing e ec on economic g ow h is he eason o public sec o e o s o p omo ing his asse class. Ko um and Le ne (2000) showed by examining pa en ing ac i i y, ha en u e capi al in es men s inc eased pa en ing h ee imes mo e han he inancing o adi ional co po a e R&D ac i i y. The eal ques ion is, whe he go e nmen s can e ec i ely p omo e en ep eneu ship ia in e ening in he VC indus y. The e is no consensus abou he ques ion o go e nmen e ec i eness in VC ma ke . An ex ensi e li e a u e highligh s he limi s and possible d awbacks o he ac i e ole o go e nmen . The e a e wo ypes o public sec o in ol emen ; i can a ec he ma ke di ec ly o indi ec ly. Di ec in e en ion is when go e nmen in es s in unds o manages hem. Go e nmen s also ha e he ools o in luence VC ma ke s indi ec ly. Taxa ion, legal en i onmen , public R&D spending, egula ion, inancial ma ke libe aliza ion a e a eas ha ha e huge e ec on VC indus y, mainly a ec ing he demand side o VC. Th ough JEREMIE he public sec o di ec ly a ec s he VC ma ke ia unding VC i ms in a hyb id public and p i a e amewo k and supe ising hem, he e o e his pape ocuses on he di ec in ol emen o he go e nmen . Fo a mo e de ailed discussion o indi ec in ol emen see; Da Rin e al. (2006), Le ne and Tåg (2013). A possible d awback o public in es men is ha i c owds ou p i a e in es o s. Leleux and Su lemon (2003) examined he c owd-ou e ec o public sec o in ol emen in case o VC and acco ding o hei esul s public in ol emen does no c owd ou p i a e in es men s, on he con a y i inc eases he amoun o capi al in es ed in he VC indus y. They also ound ha la ge public in ol emen was mo e ypical in case o smalle , less de eloped VC ma ke s. C owd-ou e ec is ypical when a ma ke eaches i s op imal le el by p i a e in es o s. In case o an in an VC ma ke like he Hunga ian, as a esul o he lack o necessa y ins i u ional en i onmen and ma ke impe ec ions he capi al alloca ion o VC indus y is no op imal and he e a e no enough unds o young, inno a i e i ms. Tempo a ily public sec o in ol emen in he VC indus y may appea wi hou he c owd-ou e ec , bu jus in i s de eloping s age. The mo e de eloped a coun y’s VC ma ke is, he less jus i ied he go e nmen in ol emen is (Ka sai, 2002). Kelly (2011) compa ed he e u ns o VC unds in he Uni ed S a es and Eu ope and ound ha he Eu opean e u ns a e below he US e u ns. One eason o his weake pe o mance is ha Eu opean ma ke is in i s de elopmen s age compa ed o he US ma ke and i ha e no ye eached he c i ical mass o wo k e ec i ely. VC in es men s ha e posi i e ex e nali ies o hei pee s, hence he mo e VC i ms ope a e in an a ea, he mo e de eloped hei en i onmen is wi h ega ds o VC indus y (Le ne , 2009). Fi s o all VC ma ke mus each he c i ical mass o de elop he ins i u ional en i onmen ha is necessa y o an e ec i e indus y (Le ne and Tåg, 2013). Go e nmen ac i i ies can play an impo an ole in c ea ing and o mula ing he ins i u ional en i onmen and a ac ing ma ke pa icipan s o VC indus y ia special incen i es. In case o a young and less de eloped VC ma ke public sec o in e en ions can help he indus y o each i s c i ical mass. In heo y his seems like a alid easoning, bu in he eal wo ld his issue is mo e complex. Wha is he poin , whe e a VC ma ke conside ed being ma u e and sel -sus aining? In spi e o he spu ing pu pose o di ec public sec o in e en ion i can easily become a se back o de elopmen . To minimize his nega i e e ec , go e nmen agendas mus also ha e an exi s a egy. F om he beginning he goals o any p og am mus be clea and go e nmen mus plan no jus o he implemen a ion o he p og am bu also o he wi hd awal om VC ma ke . A possible d awback o public sec o in ol emen can be ha i inc eases he mo al haza d o in es men s. Mo al haza d issue uns deeply in case o VC. Sahlman (1990) desc ibes he double mo al haza d p oblem o VC in es men s. The e is a wo-le el p incipal-agen ela ionship, whe e in e ms o i s ela ionship wi h he po olio companies he VC i m is he p incipal, and in e ms o i s ela ionship wi h he in es o s he VC i m is he agen . The consequence o mo al haza d p oblem in p incipal-agen ela ionship is ha he e o s o agen o maximize i s u ili y a e no op imal o he p incipal. This way he agen is no ac ing on behal o he p incipal and he ela ionship eaches less likely i s o iginal goal. In case o go e nmen backed VC unds his p oblem is mo e complex. The exposu e o public sec o o he issues o mo al haza d and p incipal-agen p oblem is ex ended and di e si ied (Lane, 2000). When ins ead o p i a e in es o s he e is a go e nmen agency ha inances VC unds han a mul i-le el p incipal-agen ela ionship e ol es. As a esul o hese p oblems go e nmen in ol emen in he VC indus y can lead o coun e p oduc i e ac ions, like inancing companies ou o he a ge g oup o inancing i ms wi h a ilia ions o he agen . These nega i e e ec s mos ly depend on he abili y o ins i u ional en i onmen on en o cing accoun abili y. Le ne (2009) examined go e nmen e o s o boos VC ma ke and en ep eneu ship and ound ha mos o hese e o s we e in ain and he ailu es we e o igina ed in he design o he p og ams. Public sec o in ol emen in he VC indus y is no unp eceden ed in Hunga y. Fo me a emp s ailed o unde s and he VC me hod, he i ms and unds c ea ed by he public sec o lacked he ea u es o VC. Public sec o backed i ms inanced p ima ily companies in adi ional indus ies, hey had di e en exi app oach, p o ided deb -like inancing ins ead o equi y-like inancing and hey we e no in ol ed in he ope a ion o en e p ises (Ka sai, 2006). These cha ac e is ics o VC a e necessa y in c ea ing a consis en sys em ha can e ec i ely spu en ep eneu ship and inno a ion. Exi app oach plays a c ucial ole in VC in es men s. VC’s can ealize p o i ia exi ing hei po olio companies so hey mus ha e an exi s a egy om he beginning o an in es men o e en be o e hey in es in o a company (Becsky-Nagy, 2006). VC’s in es in o young and smalle -sized en e p ises bu exi ing companies ia IPO o M&A is no possible p o i ably unless hey each a gi en size due o he economies o scale. As a consequence o he limi ed li e o VC unds companies mus ha e g ea g ow h po en ial o each he size on a sho un, whe e an exi can be p o i able. G ow h po en ial a ies ac oss indus ies (G eine , 1998); companies in adi ional indus ies ha e a lowe g ow h a e in a e age, while companies in high- ech o bio ech indus y a e able o g ow mo e apidly. Tha is he main eason why hey can a ac VC in es men s and why VC is associa ed wi h a ew indus ies. As a consequence o his specializa ion VC’s ob ains special expe ise and c ea e ne wo ks ha hey can u ilize in he selec ion o po olio companies and in he u he co-ope a ion wi h hem. Chemmanu e al. (2011) shows ha , he non- inancial alue added se ices o e ed by VC’s e ec i ely inc ease he alue o po olio companies his way enhance he chance o success ul exi . As we can see he ea u es o VC ollows om each o he and hey a e pa s o a consis en sys em. The unde s anding o VC me hod mus be he i s s ep in he planning o a VC agenda. The o me e o s in Hunga y we e inconsis en wi h he VC me hod. These p og ams as a esul o poo design ailed o a ac in es o s o he VC indus y and hey could no p omo e young inno a i e i ms. On he o he hand JEREMIE b eaks wi h he p e ious go e nmen agendas and i is an impo an s ep o wa d. In he ollowing sec ions he pape will desc ibe he Hunga ian JEREMIE VC p og am and i s ea ly esul s. 2. Hunga ian JEREMIE en u e capi al p og am 2.1. S uc u e o unds JEREMIE VC unds appea ed in 2010 in Hunga y. Figu e 2. shows he basic s uc u e o he p og am. The inancial esou ces o JEREMIE a e mainly om EU (85%) wi h Hunga ian go e nmen con ibu ion (15%). This capi al is managed by Ven u e Finance Hunga y PLC (VFH). Figu e 2: S uc u e o JEREMIE VC p og am Sou ce: au ho ’s illus a ion, Ven u e Finance Hunga y PLC (2013) The key elemen o he p og am is ha i d aws in p i a e sec o pa icipan s; in es o s and VC i ms. As i was discussed abo e he lack o unde s anding o VC me hod by go e nmen can lead o he ailu e o he p og ams designed o s imula e inno a ion and en ep eneu ship by spu ing VC. This nega i e e ec can be elimina ed by he pa ne ship o public and p i a e sec o ha we can see in case o JEREMIE. VFH alloca es capi al o VC i ms om p i a e sec o wi h an open ende p ocedu e. Ins ead o he go e nmen agency p i a e VC i ms in es in o companies and moni o s hei ope a ion, VFH only supe ises hem. To mee he equi emen s o he ende VC i ms had o employ expe ienced senio in es o s. Wi h he pa icipa ion o such in es o s he non- inancial alue added o VC can be inc eased. On he o he hand p i a e sec o in es o s also play an essen ial ole in JEREMIE. The e a e wo und-s uc u es in he p og am; co-in es men and join und. In case o join und public sec o unds mus be supplemen ed by p i a e sec o in es men s in a 70%-30% compound. The o he s uc u e in he p og am is co- Ven u e Finance Hunga y PLC Holding Fund (89,9 m d HUF) 85 % EU Con ibu- ion 15 % Hunga ian Go e nmen Con ibu ion VC i ms wi h join und s uc u e 30% p i a e in es o + 70% VFH PLC unding P i a e in es o s VC i ms wi h co-in es men s uc u e 100% VFH PLC unding po olio companies in es ed by p i a e in es o (30%) and VC i m (70%) po olio companies in es ed by VC i ms (100%) in es men . In his se -up he VC und i sel is inanced by VFH in a 100%, bu each in es men mus be implemen ed in co-ope a ion wi h p i a e in es o s also in a 70%-30% compound. The e a e incen i es buil in he p og am ha d aws p i a e sec o in es o s in. The e is a p o i ceiling o public sec o in es men se o he benchma k in e es a e o he EU. Abo e ha le el p i a e in es o s a e en i led o he p o i o he VC unds. In case o p o i able ope a ion as a esul o his le e age p i a e in es o s can nea ly iple hei p o i s. On he o he hand losses a e mi iga ed, 5% o losses a e aken o e by he public sec o . The ad an age o di e en s uc u es o he unds is ha i mobilizes di e en pa icipan s o VC indus y. While in es ing in o join unds is p e e able o ins i u ional in es o s because o he la ge -scale unding equi emen s, co- in es men s uc u e can a ac o he segmen s o VC ma ke like business angels, se ial-en ep eneu s o o he VC i ms specialized in smalle -scale in es men s. VC indus y and i s e ec i eness is dependen upon hese ma ke pa icipan s. Ins i u ional VC in es o s ocus is mo e on he ea ly and ea ly expansion s ages, while seed in es men s play a less impo an ole in VC po olios (Me ick, 2007). Also due economies o scale companies wi h lowe unding needs a e less likely o ge VC unding. These a e he p e-VC s ages o young, inno a i e en e p ises and he su i al and de elopmen o i ms in his pe iod a ec s he demand side o ins i u ional VC indus y. Madill e al. (2005) showed ha 57% o companies ha ecei ed business angel inancing also ecei ed VC inancing, while only 10% o VC backed companies had no ob ained business angel unding. The esul o unding gaps in he p e-VC eady s ages will be he inadequa e numbe o in es men possibili ies o VC. In o mal VC is a missing link in he chain o unding sou ces in Hunga y (Mak a, 2004) ha a ec s nega i ely he numbe o VC- eady en e p ises. Co-in es men s uc u e could mobilize hese ma ke pa icipan s hence de elops he ecosys em o VC indus y. The capi al alloca ed in o VC unds was low be o e JEREMIE. One eason is ha legal en i onmen and inancial ma ke egula ions excluded domes ic ins i u ional in es o s om VC ma ke un il 2006 when he new capi al-ma ke egula ion became e ec i e (Ka sai, 2007). Financial ma ke de egula ion and he appea ance o pension unds p o ed o be a ca alys in many coun ies, o example in he USA in he ea ly ’80 o in Sweden (Le ne and Tåg, 2013). F om 2006 al hough he egula ion allowed i , ins i u ional in es o s did no in es in o his asse class. The u u e p ospec s o Hunga ian VC ma ke a e no auspicious in ace o he e e sal o Hunga ian pension e o m. The windup o manda o y p i a e pension scheme esul s in a hia us o possible in es o s, which would be an indispensable pilla o a sel -sus aining indus y. As a esul o missing ins i u ional in es o s Hunga ian VC is dependen on egional VC i ms and o eign in es men s. 2.2. In es men policy JEREMIE unds we e ounded in ou di e en ounds and in each ound wi h di e en cha ac e is ics. The main di e ence is in he ocus o unds; 4 unds o he second ound aim companies in hei seed s age, he i s ound ocuses mainly on ea ly s age in es men s, while he o he unds o e inancing o companies in ea ly expansion s ages. Table 1. summa izes he speci ica ion o in es men policy o VC i ms dic a ed by he ende p ocedu e. The e a e es ic ions on he e i o y, age, e enue o he companies and on he size o in es men s. Table 1: Cha ac e is ics o JEREMIE VC unds in es men policy Round JEREMIE I. JEREMIE II. JEREMI E III. JEREMIE IV. S uc u e Co- In es men Join Fund Join Fund Seed Join Fund Expansion Join Fund Expansion Join Fund Expansion Numbe o Funds 1 7 4 6 8 2 Capi al (billion HUF) 7,1 40,9 8,56 32,1 34,2 8,6 Scope Te i o y Cen al- Hunga ian Region ou o Cen al-Hunga ian Region Age < 5 yea s < 5 yea s < 3 yea s < 5 yea s < 5 yea s < 5 yea s Re enue (billion HUF) < 1,5 < 1,5 < 0,2 < 5 < 5 < 5 Maximum size o in es - men 1,5 million EUR in a 12 mon h pe iod o no mo e han 3 consecu i e yea s (max. 4,5 million EUR/company) 150 housand EUR in a 12 mon h pe iod ollowed by a 150 housand EUR loan (max. 300 million EUR/company) 2,5 million EUR in a 12 mon h pe iod Sou ce: Ven u e Finance Hunga y PLC (2013) The e i o ial es ic ions de i es om ha JEREMIE was implemen ed as a pa o EU’s egional de elopmen policy. Con e gence o unde de eloped egions is one o he p ima y objec i es o EU’s egional policy so he mos de eloped Cen al- Hunga ian Region is ou o he ocus o he p og am. Only one und was aised o in es in his egion. While his objec i e migh be easonable in case o o he ins umen s o JEREMIE like loan o gua an ee p og am, bu i is inconsis en wi h VC. VC aims he mos de eloped a eas, inno a i e indus y clus e s and i is highly concen a ed (Me ick, 2007). Acco ding o he s udy o NESTA (2009) ha examined he p i a e and public hyb id unds o he UK, such egula ion o in es men policy kep go e nmen in ol emen om eaching i s goal. Te i o ial es ic ion is a coun e p oduc i e measu e o JEREMIE. O he nega i e e ec o e i o ial limi a ion is ha he co-in es men und ope a es only in he Cen al- Hunga ian Region he e o e i canno mobilize business angels in he whole coun y. I is ue especially, i we ake in o conside a ion, ha in o mal VC ope a es locally. In e ms o young inno a i e i ms, age and e enue es ic ions o JEREMIE a e so so he unding o a wide ange o en e p ises is possible. In he ime o in es men , mos companies a e in p e-comme cial s age and ha e no e enues (Chemmanu e al., 2011). The maximum size o in es men is a e y s ong cons ain (Papp, 2012), especially in case o he ou JEREMIE II. join seed unds. To in es he en i e capi al o seed unds, supposing ha i ms in es he maximum amoun o money in o a company, each VC i ms should make 24 in es men decisions. The managing o such a po olio would be ha dly possible e en i he e we e enough in es men oppo uni ies. On he o he hand he capi al alloca ed in o expansion unds is disp opo iona ely low compa ed o he highe unding needs o his s age o companies. 3. The ea ly esul s o JEREMIE The in es men pe iod o JEREMIE ends a he end o 2015. The unds o JEREMIE III. and IV. ha e s a ed hei ope a ion only a he end o 2013 and he e a e no empi ical e idences abou hei pe o mance. On he o he hand, mo e han 80 in es men s we e made by JEREMIE I. unds. O iginally, he end o in es men pe iod o JEREMIE I. was he end o 2013 bu i was p olonged un il he end o 2015. The eason o his p olonga ion is he low a e o in es men . VC unds had made decision only abou 66% o hei capi al (Ga am ölgyi, 2014) and he e ec i e disbu semen was e en lowe un il he end o 2013. One eason is ha he demand side o VC is no eady o he amoun o capi al accumula ed in JEREMIE; he e is a sho age in he numbe o VC- eady companies. Ha monized go e nmen e o s in a eas, like business incuba ion and de elopmen o en ep eneu ial ecosys em a e necessa y o he p og ess o VC indus y. Technology ans e policies could also s imula e he demand side o VC, bu in case o Hunga y as a esul o he in o ma ional gap be ween VC’s and spin-o companies he ole o VC in his a ea is no signi ican (Becsky-Nagy, 2013). Recen ly we can see go e nmen e o aiming he de elopmen o hese a eas like he es ablishmen o business incuba o s by Na ional Inno a ion O ice. Also he seed ocus o 4 JEREMIE II. unds aims o s imula e di e se segmen s o en e p ises. In he de elopmen o young inno a i e i ms VC plays an impo an ole, bu i is pa o a sys em and dependen on o he ac o s. This pape ocuses on he supply side o VC ma ke ; he mo e de ailed analysis o he demand side goes beyond his pape . The low a e o in es ed capi al does no de i e only om he insu icien amoun o in es men possibili ies. As we can see in Figu e 1., VC in es men s in Hunga y is he highes in Eu ope e en hough ha one hi d o he capi al was no in es ed. The i s ound o JEREMIE seems o be o e sized compa ed o he maximum in es men in o a company. P e ious VC agendas ailed o each inno a i e i ms (Ka sai, 2007) whe eas mos companies ob ained VC in JEREMIE ep esen his ype o en e p ises as a esul o he VC me hod consis en ope a ion o p i a e VC i ms. Un il he end o 2013 JEREMIE unds had in es ed in o 82 companies. F om he o al o 82 VC-backed i ms 37 companies a e in he ield o IT and communica ion, 16 a e in bio ech and heal hca e indus y (Ga am ölgyi, 2014). Inno a i e i ms domina e he po olios o VC i ms. To e alua e JEREMIE we ha e o ake in o conside a ion he inancial pe o mance o unds and i ms and he a ec s o he p og am on he en i onmen o VC indus y. In case o inancial pe o mance a quan i a i e esea ch, he obse a ion o po olio companies and he exi s a e necessa y o e alua e he p og am. Up o he end o 2013 he e is in o ma ion abou one success ul exi and one i m ha wen bus , mos companies s ill in p i a e. The absence o ea ly success ul exi s migh be he sign o poo pe o mance, bu he mo e de ailed assessmen o he inancial pe o mance o JEREMIE would be p ema u e, a e age in es men ime is less han 3 yea s ye . As i was men ioned be o e, he e ec s o go e nmen in ol emen on he ecosys em o VC is also an impo an c i e ia. Fu u e quali a i e esea ches should su eying he a i ude o en ep eneu s and in es o s owa d VC, hei awa eness o his asse class, de elopmen o con ac ing condi ions and he ac i i y o ma ke pa icipan s o VC ecosys em. 4. In conclusion The e is an ex ensi e li e a u e discussing he di e en aspec s o go e nmen in e en ions in he VC ma ke . In he long un public sec o in ol emen is no able o subs i u e ma ke pa icipan s, s ill in he sho un in case o in an VC indus ies go e nmen ac ions can be he ca alys s o he de elopmen . Well designed p og am’s goal mus be o a ac p i a e sec o pa icipan s and no o subs i u e hem. P e ious a emp s aiming he s imula ion o young inno a i e en e p ises ia VC ailed in Hunga y as a esul o poo design and he lack o p i a e sec o in ol emen . The g ea es achie emen o JEREMIE is ha i has d awn in di e en ma ke pa icipan s ia he pa ne ship o public and p i a e sec o . While he go e ning p incipal o he p og am is a signi ican s ep o wa d he e a e coun e p oduc i e and inconsis en es ic ions in i s implemen a ion. Regional p e e ences and he limi a ion o he size in es men s a e se backs o he e ec i eness. Also he size o unds and hei composi ion wi h ega ds o hei s age ocus a e miscalcula ed. I is he success o JEREIME ha i could each young inno a i e companies con a y o he p e ious go e nmen ac ions aiming he alle ia ion o he inancing p ospec s o hese en e p ises and ha i could a ac p i a e sec o pa icipan s. The mo e de ailed assessmen o he esul s and pe o mance o JEREMIE would be p ema u e. The p ope e alua ion o his agenda will equi e he quan i a i e analyses o inancial pe o mance o VC-backed companies and VC unds as well as he quali a i e esea ch o he de elopmen o he ecosys em. Re e ences Ake lo , G. A. (1970) The ma ke o “lemons”: Quali y unce ain y and he ma ke mechanism, The Qua e ly Jou nal o Economics, Vo. 74, No. 3, pp 488-500. Becsky-Nagy, P. (2006) Kilépések poli ikája – Hogy álnak meg a kockáza i őkések a be ek e éseik ől?, Compe i io, Vol. 5, No. 2, pp 83-98. Becsky-Nagy, P. 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