Purpose
This paper aims to examine the relative performance of multilateral development banks venture capital funds (MDBVCs) compared to that of government-sponsored venture capital funds (GVCs), assessing their impact on invested start-ups.
Design/methodology/approach
First, the authors survey the literature to understand the performance drivers of public programs designed to foster venture capital (VC). Second, the authors analyze the characteristics of multilateral development banks (MDBs) VC-related efforts. Third, based on their goals, structure, governance and management processes, the authors propose and test the hypothesis that MDBs initiatives outperform comparable public programs, overcoming the main limitations of the latter.
Findings
The authors find that start-ups funded by MDBVCs outperform GVC-funded start-ups in terms of access to subsequent financing and international expansion. Consistent with previous studies, the authors find that start-ups funded by private VCs show the highest levels of performance.
Originality/value
The paper features an unstudied actor – i.e. MDBVCs-, and an unstudied region – i.e., Latin America-, using a unique data set of 437 start-ups that received VC investments in 7 Latin American countries during the study period 2000–2018.
World Bank, Inter-American Development Bank, and Subregional Development Banks in Latin America: Dynamics of a System of Multilateral Development Banks