DETERMINANTS AND LEGITIMACY OF VENTURE CAPITAL FINANCING: AN EMPIRICAL VERIFICATION

The venture capital activity represents a financing intermediation suitable to the start-up and innovative SMEsÕ needs, and tries to confirm itself in the economic context. Indeed, such financing mode supports the companiesÕ creativity and development, particularly for the under capitalized SMEs whose access to the traditional sources of financing (bank financing and common stock financing) remain always difficult. In this field, this work tries to further explore both the key factors stimulating the venture capital activity, and the contribution of such financing mode to wealth creation and to economic growth. An empirical approach using panel data estimation is inducted here and makes up the contribution of this work. The estimation is relative to two linear regressions which constitute the retained model and tries to test both the effects of key factors on venture capital activity, and the effects of venture capital financings on economic growth. The considered data covers twelve developed countries (USA and eleven European countries), and all OLS, fixed effects and random effects estimates are applied. With respect to test results; however, only the appropriate estimates are taken into consideration. The main results show that venture capital depends positively on the R&D activity, and that such financing mode has a positive effect on economic growth. These results are also discussed to make meaningful comparisons with those of previous studies. Based on the conclusions, it may be recommended to consolidate the positive link ÒR&D Ð venture capital Ð economic growthÓ by the appropriate policies.