Who Gets to Say Yes? Screening, Delegation, and Governance
A government venture-capital programme becomes real at the moment someone decides that one company deserves a term sheet and another does not. This chapter focuses on that decision authority: who gathers information, who interprets a public mandate, and what keeps discretion aligned with both the mission and the market test. The practical judgment is to look beyond the ownership chart and examine the people, incentives, constraints, and oversight that shape the screen.
Three ways to staff a public screen
The OECD describes three broad management arrangements. A fund may be managed internally by an existing public financial institution, externally by an established private VC firm, or through an integrated organisation created for the public programme but staffed by investment professionals. The arrangements are not just different employment choices. They determine what expertise enters the process, how much discretion the manager has, and how easily the public objective can be translated into an investment decision.
Internal management is often housed in a public financial corporation or development bank. Such organisations may already have relationships with companies and the capacity to administer several forms of support. They can give government a direct channel into investment decisions and make it easier to coordinate equity with grants or loans. But a broad development institution may be organised around traditional lending rather than the uncertain, fast-moving work of venture investing. The incentives, language, and professional identity that fit a bank-like organisation do not automatically fit a fund that must evaluate unproven technologies and accept that many experiments will fail.
The OECD cites evidence from interviews about Germany's KfW in which programmes theoretically aimed at start-ups were historically used more by traditional small and medium-sized firms in their start-up phase than by genuinely innovative start-ups. This is a useful warning about implementation drift. A programme can be formally targeted at innovation while its delivery channel reaches applicants that are easier to understand and finance. The gap between mandate and portfolio then arises before any political interference or bad faith: the organisation's routines make one type of company more legible than another.
Internal management is not synonymous with weak management. The same discussion describes Bpifrance as having built close ties with private VC investors and recruited senior managers from private funds. Those connections can transfer investment practices, contacts, and experience into a public institution. The institution may not copy the compensation structure of a private fund, but relationships and movement between the sectors can help it operate in a way that is more compatible with innovation finance. The lesson is conditional: internal capability depends on the institution's design and staffing, not on its public status alone.
External management takes the opposite route. Government delegates the fund to an existing private VC organisation, whose professionals may also manage fully private funds. This can supply specialised industry knowledge, networks, due-diligence routines, and a practical understanding of exits. It may also make the programme credible to private investors and portfolio companies. An external manager is not a neutral pipe, however. They bring an existing investment style, relationships, and incentives.