The Genesis of Venture Capital: Lessons from the German Experience
Posted: 4 Nov 2009
Date Written: 2005
Abstract
The initial attempt at promoting venture capital (VC) in Germany was a massive failure.The history of the first German VC fund, the Deutsche Wagnisfinanzierungsgesellschaft (WFG), provides researchers with a means of studying the factors that impact VC success or failure.Many factors contributed to the failure of the WFG, including improper contracting and governance structures, conflicts of interest between the government and banks, and problematic institutional and economic structures, including the role of the stock market in the development of the VC industry. To study the failure of the WFG and the influence of these factors, the theoretical foundations for the research and the methodology are discussed.A review of the history and of the functioning of the WFG is provided.Following this review of the WFG, the problematic factors influencing the performance of the WFG are explored and their significance is discussed.In closing, changes to the German system are recommended in order for the VC market to develop and succeed. (AKP)
Keywords: Venture capital funds, Deutsche Wagnisfinanzierungsgersellschaft (WFG), Public policies, Stock markets, Venture capital, Banks, Failure analysis, Firm governance, Organizational structures, Program evaluation
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