Venture Capital, an Efficient Funding of Innovation on the Long Term

Venture capital is a long run investment that aims at fostering radical innovations and at increasing the innovative capacity of firms. The United States are by far the country that is the most innovative and the one that invests the greatest amount in venture capital whereas Europe and France stay behind. The explanations to the underinvestment in venture capital in France rely on the mismatch between demand and supply, the low expertise of venture capitalists and on the weak development of seed capital. We suggest policy measures to foster the development of an efficient venture capital industry that creates innovation.