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The role of government venture capital funds: recent lessons from the UK experience

Mac an Bhaird, Ciarán ORCID: 0000-0003-2863-3398, Owen, Robyn ORCID: 0000-0003-4241-3367 and North, David ORCID: 0000-0003-4925-6392 (2019) The role of government venture capital funds: recent lessons from the UK experience. Strategic Change, 28 (1). pp. 69-82. ISSN 1086-1718

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Abstract

We investigate the effectiveness of government backed venture capital schemes (GVCs) in funding early stage entrepreneurial ventures. Addressing fundamental issues of additionality, crowding out, economic impact and sustainability, we discover that UK GVC-backed schemes have evolved to provide more effective, targeted, funding for high growth potential firms. Combining primary data from a number of sources, we discover positive impacts of increases in turnover and employment in funded ventures, along with effective targeting of specific funding gaps. Significant issues remain, including a lack of liquidity in follow-on funding and a requirement for longer time horizon in funds, as firms typically fall behind in development schedules. There is, therefore, a need for greater flexibility in GVC-backed funds. Policy designers should be cognisant of the changing external financing ecosystem when designing co-investment schemes.

Item Type:Article (Published)
Refereed:Yes
Uncontrolled Keywords:Government venture capital funds (GVCFs); Global financial crisis (GFC); Co-investment funds; Venture capital; Business angel financing.
Subjects:Business > Economics
Business > Finance
DCU Faculties and Centres:DCU Faculties and Schools > Faculty of Humanities and Social Science > Fiontar agus Scoil na Gaeilge
Publisher:John Wiley & Sons
Official URL:https://doi.org/10.1002/jsc.2247
Copyright Information:© 2019 John Wiley & Sons
Use License:This item is licensed under a Creative Commons Attribution-NonCommercial-Share Alike 3.0 License. View License
ID Code:22958
Deposited On:31 Jan 2019 12:03 by Ciarán Mac An bhaird . Last Modified 13 Jan 2021 04:30

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