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<p>This paper examines how government venture capital (GVC) affects firm growth and financing in small and medium-sized enterprises. Using matched panel data for Swedish firms over 2008–2020, we evaluate impacts on employment, sales, equity, and debt. GVC-backed firms expand employment almost immediately after investment, while sales growth follows with a lag of 2 to 3&#xa0;years. GVC participation also strengthens firms’ equity positions and improves access to bank credit, consistent with certification and balance-sheet channels that alleviate financial constraints. Importantly, the positive impacts are concentrated in metropolitan and innovation-dense regions. Despite receiving a disproportionately large share of GVC funding due to regional allocation rules, rural and peripheral regions display notably weaker effects, suggesting that local ecosystem depth moderates program effectiveness. These findings highlight the dual role of GVC as both growth finance and a mechanism for reducing capital-market imperfections, while raising policy questions about the efficiency of geographically earmarked allocation. These findings demonstrate that GVC generates genuine financial additionality by improving both equity and credit access.</p>

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Government venture capital and financial constraints: growth and credit effects among Swedish SMEs

  • 期刊论文

  • 发表日期：

    2026年3月28日

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  • Roger Svensson

摘要

This paper examines how government venture capital (GVC) affects firm growth and financing in small and medium-sized enterprises. Using matched panel data for Swedish firms over 2008–2020, we evaluate impacts on employment, sales, equity, and debt. GVC-backed firms expand employment almost immediately after investment, while sales growth follows with a lag of 2 to 3 years. GVC participation also strengthens firms’ equity positions and improves access to bank credit, consistent with certification and balance-sheet channels that alleviate financial constraints. Importantly, the positive impacts are concentrated in metropolitan and innovation-dense regions. Despite receiving a disproportionately large share of GVC funding due to regional allocation rules, rural and peripheral regions display notably weaker effects, suggesting that local ecosystem depth moderates program effectiveness. These findings highlight the dual role of GVC as both growth finance and a mechanism for reducing capital-market imperfections, while raising policy questions about the efficiency of geographically earmarked allocation. These findings demonstrate that GVC generates genuine financial additionality by improving both equity and credit access.