Models for Allocating Public Venture Capital to Innovation Projects : Lessons from a French Public Agency

Examines the different models used by a French publicagency (Agence Nationale Pour la Valorisation de la Recherche [ANVAR]) whendeciding which new firms and innovations to support financially. This agencyprovides funds to implement innovation in either a pre-existing firm or throughthe creation of a new firm in the biotechnology and information technologyindustries. After a description of the framework for public support of privateinnovation and the tools for selecting innovative public venture capitalprojects, cognitive maps (i.e., graphic representations of individual states ofknowledge in a defined field) are used to uncover ANVAR's project selectionprocesses. Results indicate that that the agency's models of evaluation are differentfor projects related to the two emerging technologies. In other words, projectsrelated to each of the technologies have their own specificity in terms ofcapacity to appropriate rents from innovation, factors limiting profitability,and the nature of risks. These findings offer useful insights for privateventure capital organizations as well as public agencies. (SAA)