Promoting High-Growth Entrepreneurship in Peripheral Regions: a Critique
                        of Government Sponsored Venture Capital Funds

Mason, Colin

doi:10.18573/j.2016.10056

Cited by 7 publications

(10 citation statements)

References 18 publications

(21 reference statements)

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“…To compensate for potential equity gaps in economically lagging areas, governments have often implemented local GVC programs to foster regional development (Bertoni et al, 2017;Bertoni and Tykvová, 2015;Kovner and Lerner, 2015;Lerner, 1999Lerner, , 2002. The creation of such regional funds follows the assumption that there is enough high-quality demand for funding from YICs located in those regions (Mason, 2016). Recent accounts, however, do not support this argument: peripheral underdeveloped regions may suffer from a lack of infrastructure, R&D and innovation intensity, and appropriate quality of entrepreneurial human capital (Munari and Toschi, 2015).…”

Section: Location/colocationmentioning

confidence: 99%

“…In fact, YIC financing is usually staged and involves a series of funding rounds from smaller seed capital injections, e.g., by BAs or "the crowd", moving on to more important capital contributions, e.g., by professional VCs. This structure is often called the "funding escalator" (Mason, 2016), where investors generally position themselves in terms of the investment amounts they are willing to provide. If, for some reason, a venture's current investors are not able to provide follow-on financing and the funds needed are below the level of what subsequent investors usually supply, then the funding escalator stalls.…”

Section: Introductionmentioning

confidence: 99%

“…One such policy is to inject equity capital into selected ventures via GVCs. While many governments across the world make use of this device (Lerner, 2009), such initiatives are often found to be ineffective (Mason, 2016). The success or failure of a given policy, however, is a function of its design features (Arshed et al, 2014), and there is a strong heterogeneity among GVC policies, which are set up in different contexts and time periods.…”

Section: Introductionmentioning

confidence: 99%

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Bridging the equity gap for young innovative companies: The design of effective government venture capital fund programs

2020

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Governmental venture capital funds (GVCs) are created by policymakers around the world to support young innovative companies (YICs) with the aim of "bridging the equity gap". In this paper, we study the heterogeneity in the design of GVC programs in Europe and identify the design features that are most effective in achieving the desired outcomes of this policy. Specifically, we focus on the probability that GVC-backed companies will receive additional funds from private venture capital investors and, ultimately, changes in their growth and innovation outcomes. We find that the choices of location, colocation, syndication and industry focus of a GVC program substantially influence the extent to which it is able to achieve such goals. Important policy implications are discussed. "…Not only are we faced with a serious investment gap; we are caught in an investment trap. […] While investment is taking off in the U.S., Europe is lagging behind. Why? Because investors lack confidence, credibility and trust. […] …What we are going to do is to set up the right system that will use available public money to leverage additional capital that would have never otherwise been mobilised. Every public euro mobilised can generate additional investment that would not have happened otherwise. And it can create jobs…"

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Section: Location/colocationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Bridging the equity gap for young innovative companies: The design of effective government venture capital fund programs

2020

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“…Very few GVCFS have been deemed successful (Brander et al, 2008;Colombo et al, 2014;Lerner, 2009;Mason, 2016;Munari and Toschi, 2014). Many have experienced agency failures (Akerlof, 1976) leading to inadequate approaches to information asymmetries (e.g.…”

Section: Gvcfs and Emerging Role Of Cifsmentioning

confidence: 99%

The role of government co-investment funds in the supply of entrepreneurial finance: An assessment of the early operation of the UK Angel Co-investment Fund

Owen

Mason

2016

Environment and Planning C: Politics and Space

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Co-investment funds -which invest alongside private investors, especially business angelsthereby leveraging their networks and experience and minimizing public sector transaction costs -are a recent approach by governments in various countries to address the early stage entrepreneurial funding gap which is perceived as a barrier to the ability of firms to scale-up. However, little literature exists on their operation, impact and effectiveness. This paper assesses the early operation of the UK's Angel Co-investment Fund, established in 2011. Interview evidence from angels and business managers suggests that the Angel Co-investment Fund is improving the availability of finance by enabling firms to raise funding rounds of between »500,000 and »2 m, hence addressing some aspects of the broken finance escalator model. However, our evidence suggests that it is not yet impacting the supply side, either in terms of stimulating the formation of new angel groups or enhancing learning amongst less experienced angels. Some aspects of the operation of the investment process have attracted criticism from angels and entrepreneurs which need to be addressed. Nevertheless, there is sufficient evidence for positive impact to justify the scheme's expansion.

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“…As Chadwick et al, (2013, p.846) noted, "in the early stages of the development of the LEPs, very few had been able to provide a clear articulation of exactly what their priorities were, what they were working towards and how they would measure their success." Government policy and resource constraints have, however focused their activity on driving on businesses with high growth (Mason, 2016). Therefore, it is critical to establish pre-LEP baseline data that uncovers the objectives and strategic focus of SMEs regarding growth.…”

Section: Introductionmentioning

confidence: 99%

Growth and innovation of SMEs in local enterprise partnerships regions: A configurational analysis using fsQCA

Beynon

Jones

Pickernell³

et al. 2019

The International Journal of Entrepreneurship and Innovation

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Local enterprise partnerships (LEPs) were introduced by the UK government in 2010 to promote local economic development. There is, however, a minimal pre-LEP baseline analysis concerning aspirations of small and medium-sized enterprises (SMEs) in LEP geographies. Employing Federation of Small Businesses 2010 data gathered before LEP policy activities began. This study examines growth and innovation intention of SMEs in LEP-defined areas. The analysis demonstrates how key internal SME strategic focus areas of staffing levels, training investment, research and development and online presence support their growth and innovation intentions. Results from fuzzy-set qualitative comparative analysis demonstrate that SMEs’ growth and innovation intentions and strategic areas that drive these intentions differ substantially between LEP-defined regions. This study contributes to knowledge providing baseline data outlining objectives and strategic foci of SMEs in different LEP areas, allowing LEPs to effectively evaluate programmes aligned with the requirements of their SMEs, potentially informing future policymaking.

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Promoting High-Growth Entrepreneurship in Peripheral Regions: a Critique of Government Sponsored Venture Capital Funds

Cited by 7 publications

References 18 publications

Bridging the equity gap for young innovative companies: The design of effective government venture capital fund programs

Bridging the equity gap for young innovative companies: The design of effective government venture capital fund programs

The role of government co-investment funds in the supply of entrepreneurial finance: An assessment of the early operation of the UK Angel Co-investment Fund

Growth and innovation of SMEs in local enterprise partnerships regions: A configurational analysis using fsQCA

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