The Institutional Framework of Public Versus Private Capital Funding

This study employs institutional theory to explore the funding tendencies of public and private capital. Specifically, we analyze the funding structures of private equity investors (private capital) and government agencies (public capital) to understand how their institutional frameworks influence approaches to financing new ventures. By examining these differences, we demonstrate how the sources and dynamics of private versus public funding shape decision-making processes and priorities in venture financing. Our analysis highlights contrasting preferences: private equity investors prioritize emotionally resonant and character-driven entrepreneurial narratives, whereas government agencies favor entrepreneurs who emphasize logical and structured approaches. This study is based on an examination of 266 companies that sought funding from both government agencies, such as the Department of Defense, and private equity firms.