Government venture capital and Europe’s innovation strategy

This paper examines the role of government venture capital (GVC) in addressing persistent gaps in Europe’s risk capital. Unlike the US, Europe faces fragmented financial markets, lower risk tolerance and often disconnected low levels of private institutional investment. National and EU level GVC programmes can support high-potential firms, crowd in private investment and promote entrepreneurship. Drawing on recent data and case studies, the paper analyses the rationale for public intervention, typologies of GVC models, design features and interactions with other policy tools. It also provides policy recommendations to enhance the effectiveness, strategic alignment, and governance of GVC programmes in Europe within broader industrial policy frameworks.