The sovereign debt crisis hits the European economy hard. Politicians are desperate for solutions. But resolving the crisis would be much more difficult if economies continued to slow or contract. The key driver of modern economic growth is entrepreneurial innovation (Schumpeter, 1911, 1934; Romer, 1990; Grossman and Helpman, 2002; and Aghion and Howitt, 1992, 1998). Innovation requires constant investment in entrepreneurial ventures. Entrepreneurial financing, however, is too risky and too expensive for prudent traditional investors. Financial problems are particularly acute in high-growth entrepreneurial firms due to their inherent uncertainty (Hall, 2002). The Community Innovation Survey (2002) reports that the lack of adequate sources of financing and the high costs of innovation are the most cited hindering factors in European companies. Financial constraints force almost one in three innovative or potentially innovative Dutch companies to abandon or slow down their innovative projects (Mohnen, Palm, van Der Loeff, & Tiwart, 2008). Savignac (2006) also finds that in France 17.25% of innovative companies are financially constrained. The Venture Capital (VC) market provides the unique link between financial surplus and innovation and mitigates the problem of underinvestment in innovative activities by small and new businesses. businesses (Hall, 2002). The structure of venture capital firms appears to be specifically designed to light the fires of scrappy and ambitious start-ups, to materialize new business ideas, and to maximize the return on investments in real innovation projects (Stuck and Weingarten, 2005). There is both ad hoc and academic evidence suggesting that VC stimulates American innovation, for example NVCA (2010), Hellmann and Puri (2000), Kortum and Lerner (2001), and Ueda and Hirukawa (2003). The empirical result in Europe, however, is not unanimous. On the one hand, Tykvova (2000) finds that VC investments have a very significant positive effect on patenting activity in Germany. Engel and Keilbach (2002) reveal that the average number of patents in the German VC-backed group is slightly higher than in the control group. Bertoni et al. (2009) report that VC investments promote the patenting activity of Italian companies. And Colombo et al. (2009a) find that VC investments have a positive impact on the productivity of 222 Italian companies operating in the high-tech manufacturing and services sector. On the other hand, Peneder (2010) finds that Austrian VCs have a positive impact on business growth, but not on innovation production. Pinch and Sunley (2009) find that there is little evidence that UK VCs promote the innovative performance of their investees.