Asia-Pacific Journal of Business Venturing and Entrepreneurship (벤처창업연구)

The Korean Society of Business Venturing (한국벤처창업학회)
권호 표지

The Signaling Effect of Government R&D Subsidies on Inducing Venture Capital Funding

스타트업 대상 정부 R&D 지원금의 벤처 투자 유도 효과

  • Hong, Seulki (The Graduate School of Management of Technology, Yonsei University) ;
  • Bae, Sung Joo (School of Business, Yonsei University)
  • 홍슬기 (연세대학교 기술경영학협동과정) ;
  • 배성주 (연세대학교 경영대학)
  • Received : 2022.11.10
  • Accepted : 2022.12.19
  • Published : 2022.12.31
Download PDF
⟨ Previous Next ⟩

Abstract

Based on the signaling theory, this study examined whether startups are more likely to attract venture investment when receiving government R&D subsidies. First, we reviewed previous studies of the investment decision-making process of venture capitalists and understood the conditions that influence investment decisions. Based on previous studies on the signal effect of government subsidies, particularly government R&D grants, on inducing private fund investment, this study revealed a mechanism to induce venture investment by startups. In addition, in order to verify whether government R&D subsidies have the effect of inducing venture investment, an empirical analysis was conducted based on data from startups under seven years and certified as a venture companies in 2021. This paper used PSM(Propensity Score Matching) method and DID(Difference In Difference) analysis for an empirical study to analyze the average treatment effect on the treated group(beneficiary startups of government R&D grants). As a result of empirical analysis, companies that receive more government R&D subsidies after starting a business are more likely to attract venture investment. From two to three years after conducting the first government R&D project, startups that received government R&D grants attracted more venture investment than those that did not. The results of this paper demonstrate that government R&D projects can also affect the venture investment ecosystem, giving policy implications to government R&D projects targeting startups. It is also expected to suggest strategic implications to startups that need new funding.

본 논문에서는 시그널링 이론을 기반으로 스타트업이 정부 R&D 지원금을 받았을 때 벤처 투자를 유치하게될 가능성이 높아지는지 살펴보았다. 먼저 벤처캐피털 투자자들의 투자 의사결정 과정과 투자 결정에 영향을 미치는 조건들을 선행연구를 통해 이해하였다. 정부 지원금의 시그널 효과와 정부 R&D 지원금의 민간자금 투자 유도 효과에 대한 선행연구를 토대로 정부 R&D 지원이 스타트업의 벤처투자를 유도하는 메커니즘을 밝혔다. 그리고 정부 R&D 지원이 실제 벤처투자를 유도하는 효과가 있는지 검증하기 위해 2021년 벤처기업으로 인증받은 업력 7년 이하의 스타트업 데이터를 바탕으로 실증분석을 수행하였다. 정부 R&D 지원과 벤처투자에 모두 영향을 미칠 수 있는 요인들을 제거하고 정부 R&D 지원이 벤처투자 유도에 미치는 순효과를 분석하기 위해 성향점수매칭법과 이중차분법을 순차적으로 적용하는 분석방법을 활용하였다. 실증분석 결과 창업 후 정부 R&D 지원금을 많이 받은 기업일수록 벤처 투자를 유치할 확률이 높아지며, 최초 정부 R&D 과제를 수행한 뒤 2년이 지난 시점부터 정부 R&D 지원의 벤처투자 유도 효과가 발생해 최초 과제수행 후 3년이 지난 시점까지 지속되는 것을 알 수 있었다. 본 논문의 결과는 정부 R&D 사업이 벤처투자 생태계에도 영향을 줄 수 있다는 것을 입증해 스타트업을 대상으로하는 정부 R&D 사업 기획에 정책적인 시사점을 줄 수 있을 것이다. 또한 신규 자금 조달이 필요한 스타트업에도 전략적 시사점을 줄 수 있을 것으로 기대된다.

Keywords

References

  1. Audretsch, D. B., Bonte, W., & Mahagaonkar, P.(2012). Financial signaling by innovative nascent ventures: The relevance of patents and prototypes. Research Policy, 41(8), 1407-1421. https://doi.org/10.1016/j.respol.2012.02.003
  2. Bachher, J. S., & Guild, P. D.(1996). Financing early stage technology based companies: investment criteria used by investors. Frontiers of Entrepreneurship Research, 996, 363-76.
  3. Bygrave, W. D., & Timmons, J.(1992). Venture capital at the crossroads. University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship.
  4. Certo, S. T., Daily, C. M., & Dalton, D. R.(2001). Signaling firm value through board structure: An investigation of initial public offerings. Entrepreneurship Theory and Practice, 26(2), 33-50. https://doi.org/10.1177/104225870102600202
  5. Chen, J., Heng, C. S., Tan, B. C., & Lin, Z.(2018). The distinct signaling effects of R&D subsidy and non-R&D subsidy on IPO performance of IT entrepreneurial firms in China. Research Policy, 47(1), 108-120. https://doi.org/10.1016/j.respol.2017.10.004
  6. Colombo, O.(2021). The use of signals in new-venture financing: A review and research agenda. Journal of Management, 47(1), 237-259. https://doi.org/10.1177/0149206320911090
  7. Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R.(2011). Signaling theory: A review and assessment. Journal of management, 37(1), 39-67. https://doi.org/10.1177/0149206310388419
  8. Engel, D., & Keilbach, M.(2007). Firm-level implications of early stage venture capital investment-An empirical investigation. Journal of Empirical Finance, 14(2), 150-167. https://doi.org/10.1016/j.jempfin.2006.03.004
  9. Florida, R. L., & Kenney, M.(1988). Venture capital-financed innovation and technological change in the USA. Research policy, 17(3), 119-137. https://doi.org/10.1016/0048-7333(88)90038-8
  10. Gompers, P., & Lerner, J.(1996). The use of covenants: An empirical analysis of venture partnership agreements. The Journal of Law and Economics, 39(2), 463-498. https://doi.org/10.1086/467356
  11. Gompers, P. A.(1995). Optimal investment, monitoring, and the staging of venture capital. The Journal of Finance, 50(5), 1461-1489. https://doi.org/10.1111/j.1540-6261.1995.tb05185.x
  12. Gulati, R., & Higgins, M. C.(2003). Which ties matter when? The contingent effects of interorganizational partnerships on IPO success. Strategic management journal, 24(2), 127-144. https://doi.org/10.1002/smj.287
  13. Hellmann, T., & Puri, M.(2002). Venture capital and the professionalization of start-up firms: Empirical evidence. The journal of finance, 57(1), 169-197. https://doi.org/10.1111/1540-6261.00419
  14. Hsu, D. H.(2007). Experienced entrepreneurial founders, organizational capital, and venture capital funding. Research policy, 36(5), 722-741. https://doi.org/10.1016/j.respol.2007.02.022
  15. Hoenig, D., & Henkel, J.(2015). Quality signals? The role of patents, alliances, and team experience in venture capital financing. Research Policy, 44(5), 1049-1064. https://doi.org/10.1016/j.respol.2014.11.011
  16. Hoenen, S., Kolympiris, C., Schoenmakers, W., & Kalaitzandonakes, N.(2014). The diminishing signaling value of patents between early rounds of venture capital financing. Research Policy, 43(6), 956-989. https://doi.org/10.1016/j.respol.2014.01.006
  17. Holland, P. W.(1986). Statistics and causal inference. Journal of the American statistical Association, 81(396), 945-960. https://doi.org/10.1080/01621459.1986.10478354
  18. Hong, S. K., & Bae, S. J.(2022). The Performance of Grant-type Government R&D Project: Focusing on SME's R&D. Journal of Technology Innovation, 30(4), 57-82. https://doi.org/10.14386/SIME.2022.30.4.57
  19. Hulsink, W., & Scholten, V.(2017). Dedicated funding for leasing and sharing research and test facilities and its impact on innovation, follow-on financing and growth of biotech start-ups: the Mibiton case. Venture capital, 19(1-2), 95-118. https://doi.org/10.1080/13691066.2017.1261454
  20. Higgins, M. C., & Gulati, R.(2006). Stacking the deck: The effects of top management backgrounds on investor decisions. Strategic Management Journal, 27(1), 1-25. https://doi.org/10.1002/smj.495
  21. Islam, M., Fremeth, A., & Marcus, A.(2018). Signaling by early stage startups: US government research grants and venture capital funding. Journal of Business Venturing, 33(1), 35-51. https://doi.org/10.1016/j.jbusvent.2017.10.001
  22. Koo, J. H., Kim, Y. J., Lee, S. Y., Kim, D. Y., & Baek, J. Y.(2019). A Study on the Factors Affecting Investment Decision of Korean Venture Capitalist. Asia-Pacific Journal of Business Venturing and Entrepreneurship, 14(4), 1-18. https://doi.org/10.16972/APJBVE.14.4.201908.1
  23. Kang, W. J., Lee, B. H., & Oh, W. G.(2012). The Effects of the Utilization of External Resources on the Technological Innovation Performance Along the Stages of Growth in Korean Ventures. Asia-Pacific Journal of Business Venturing and Entrepreneurship, 7(1), 35-45. https://doi.org/10.16972/APJBVE.7.1.201203.35
  24. Kim, H. S.(2007). Effectiveness of Tax Policy Towards R&D. Seoul: KERI.
  25. Kim, K. W.(2011). An Analysis of Venture Firms' Growth in Korea: Focusing on the Differences between 'Venture Certification Types'. Seoul: KDI.
  26. Kim, S. W., Kim, Y. H., Lee, J. W., Kim, B. G., Suh, Y. J., Koo, W. M., Hong, W. S., & Ko, H. J.(2017). Impact Analysis of Government Startup Support Programs. Sejong: STEPI.
  27. KISTEP(2022a). Nationl R&D Survey and Analysis. Sejong: Ministry of Science and ICT.
  28. KISTEP(2022b). National R&D program performance analysis. Sejong: Ministry of Science and ICT.
  29. Kleer, R.(2010). Government R&D subsidies as a signal for private investors. Research Policy, 39(10), 1361-1374. https://doi.org/10.1016/j.respol.2010.08.001
  30. Korean Venture Capital Association(2022). Venture Investment Firms and Association. Retrieved(2022.1.31.) from https://www.index.go.kr/unity/potal/main/EachDtlPageDetail.do?idx_cd=1196
  31. Lee, J. Y., & Ki, J. H.(2020). An Empirical Study on the Effectiveness of the Government R&D Subsidies for ICT Firms. Journal of Korea Technology Innovation Society, 23(4), 698-722. https://doi.org/10.35978/jktis.2020.8.23.4.698
  32. Lee, J. H., & Jung, T. H.(2016). The Impact of Government Funds in Venture Capital on Investment in Early-Stage Firms: An Evidence from Korean Venture Capital. Asia-Pacific Journal of Business Venturing and Entrepreneurship, 11(2), 75-87. https://doi.org/10.16972/apjbve.11.2.201604.75
  33. Lee, J. W.(2022). Employment Effectiveness of Innovation-certified SMEs and General SMEs: A Comparative Analysis. Asia-Pacific Journal of Business Venturing and Entrepreneurship, 17(3), 257-267. https://doi.org/10.16972/APJBVE.17.3.202206.257
  34. Mason, C., & Stark, M.(2004). What do investors look for in a business plan? A comparison of the investment criteria of bankers, venture capitalists and business angels. International small business journal, 22(3), 227-248. https://doi.org/10.1177/0266242604042377
  35. MacMillan, I. C., Siegel, R., & Narasimha, P. S.(1985). Criteria used by venture capitalists to evaluate new venture proposals. Journal of Business venturing, 1(1), 119-128. https://doi.org/10.1016/0883-9026(85)90011-4
  36. Mason, C., & Stark, M.(2004). What do investors look for in a business plan? A comparison of the investment criteria of bankers, venture capitalists and business angels. International small business journal, 22(3), 227-248. https://doi.org/10.1177/0266242604042377
  37. Ministry of SMEs and Startups(2021). Venture Firms. Retrieved(2022.8.18.) from https://www.mss.go.kr/site/smba/foffice/ex/statDB/temaList.do.
  38. Office of Strategic R&D Planning(2022). Deep Change: 2030 Technological Innovation Strategies in korea. Daegu: Korea Evaluation Institute of Industrial Technology.
  39. Oh, S. H., & Jang, P. S.(2020). The Effect of Government R&D Support on Manufacturing Firms' Innovation Activities and Innovation Performance. Journal of Korea Technology Innovation Society, 23(5), 941-966. https://doi.org/10.35978/jktis.2020.10.23.5.941
  40. Park, J. Y.(2017). The policy for the revitalization of venture business. Seoul: National Assembly Research Service.
  41. Park, Y. R.(2013). The present condition and development plan of venture ecosystem. Seoul: STEPI.
  42. Rosenbaum, P. R.(2002). Overt bias in observational studies. Observational studies, 71-104.
  43. Sahlman, W. A.(1990). Why sane people shouldn't serve on public boards. Harvard Business Review, 68(3), 28-32.
  44. Sanders, W. G., & Boivie, S.(2004). Sorting things out: Valuation of new firms in uncertain markets. Strategic Management Journal, 25(2), 167-186. https://doi.org/10.1002/smj.370
  45. Svetek, M.(2022). Signaling in the context of early-stage equity financing: review and directions. Venture capital, 24(1), 71-104. https://doi.org/10.1080/13691066.2022.2063092
  46. Stevenson, R., Kier, A. S., & Taylor, S. G.(2021). Do policy makers take grants for granted? The efficacy of public sponsorship for innovative entrepreneurship. Strategic Entrepreneurship Journal, 15(2), 231-253. https://doi.org/10.1002/sej.1376
  47. Stiglitz, J. E.(2002). Information and the Change in the Paradigm in Economics. American economic review, 92(3), 460-501. https://doi.org/10.1257/00028280260136363
  48. Soderblom, A., Samuelsson, M., Wiklund, J., & Sandberg, R.(2015). Inside the black box of outcome additionality: Effects of early-stage government subsidies on resource accumulation and new venture performance. Research Policy, 44(8), 1501-1512. https://doi.org/10.1016/j.respol.2015.05.009
  49. Venture Certification System(2022). Venture Firm Descriptions. Retrieved(2022.11.4.) from https://www.smes.go.kr/venturein/pbntc/searchVntrCmp.
  50. Wallsten, S. J.(2000). The effects of government-industry R&D programs on private R&D: the case of the Small Business Innovation Research program. The RAND Journal of Economics, 82-100.
  51. Wu, A.(2017). The signal effect of government R&D subsidies in China: does ownership matter?. Technological Forecasting and Social Change, 117, 339-345. https://doi.org/10.1016/j.techfore.2016.08.033
  52. Yan, Z., & Li, Y.(2018). Signaling through government subsidy: Certification or endorsement. Finance Research Letters, 25, 90-95. https://doi.org/10.1016/j.frl.2017.10.007
  53. Yang, H. K., Yang, H. S., & Song, W. K.(2019). Analysis of the Effectiveness of Government's SME R&D Subsidies: Focusing on Information and Communications Technology(ICT) Industry. Journal of The Korean Operations Research and Management Science Society, 44(3), 31-44. https://doi.org/10.7737/jkorms.2019.44.3.031