Public Grants and Venture Capital investments as complementary sources for SME financing

Abstract

We analyze the different characteristics of companies, and in particular of Small and Medium Enterprises (SMEs), having access to forms of public subsidy or private financing. We then examine one of the most widespread public subsidies aimed at young and innovative SMEs of the European Union (i.e., Horizon 2020) and compare it with Venture Capital, a financial instrument typically oriented to fund equity of similar companies. Conversely, by comparing the characteristics of the companies that receive one or the other types of instruments, we find significant differences in the corporate characteristics of the funded companies both in terms of size (revenues, assets) and development phase.