Public Policy for Venture Capital A Comparison of the United States and Germany

In view of Germany's lackluster economic performance during the 1990s, i. e. , at a time when the American economy was booming, a relative lack of venture capital vis-a-vis the United States was lamented in Germany. Ger man government programs meant to help raise venture capital in order to fi nance "predominantly young, technologically innovative, unlisted small- and medium-sized enterprises which, despite low current profitability, are consid ered to have a suflficiently large growth potential," (Deutsche Bundesbank) were to a large extent unsuccessful since their inception in the 1960s. It is well-known that Germans tend to be more risk-averse than Americans, and it is therefore no wonder that the author of this book, Arnd Plagge, finds that Germany's venture capital market is relatively underdeveloped when compared to its counterpart in the United States. There can be no doubt that due to its investment focus on innovative start-up companies, venture capital can play an important role in fostering economic growth and the creation of modern high-skill jobs, especially by spurring the development of entirely new industries and products from such diverse and dynamic realms as pharmaceuticals, biotechnology as well as information and communication technology.