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A Policy Response to Regional Disparities in the Supply of Risk Capital to New Technology-based Firms in the European Union: The European Seed Capital Fund Scheme

  • Gordon Murray
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    MURRAY G. C. (1998) A policy response to regional disparities in the supply of risk capital to new technology-based firms in the European Union: the European Seed Capital Fund Scheme, Reg. Studies 32 , 405-419. The European Seed Capital Fund Pilot Scheme (1988-95) was a European Commission response to two primary concerns that: (1) private venture capital firms in Europe were increasingly retreating from the financing and support of start-up, early-stage and, particularly, technologybased enterprises; and (2) existing spatial concentrations in the supply of venture capital prejudiced the formation of new, innovative businesses in less economically developed regions of the Union. This paper presents the updated results of a study of this Scheme in 1992. The comparative internal dynamics of the Seed Funds are explored. The Scheme realized its goal of encouraging private investment into innovative, technology-based young firms. However, the continued ability of the funds to meet longer-term commercial and/or regional developmental objectives is questioned given scale-related problems of economic viability. MURRAY G. C. (1998) La reponse politique aux ecarts regionaux de l'offre de capital-risque aux entreprises basees sur les nouvelles technologies et situees au sein de l'Union europeenne: le programme en faveur d'un fonds europeen de capitaux de lancement, Reg. Studies 32 , 405-419. Le programme en faveur d'un fonds europeen de capitaux de lancement (European Seed Capital Fund Pilot Scheme 1988-95), a ete une reponse de la part de la Commission europeenne a deux soucis primordiaux. Primo, en Europe les entreprises de capital-risque privees se retiraient de plus en plus du financement et du soutien des pepinieres d'entreprises, des entreprises dans les phases initiales de developpement et des entreprises basees sur les nouvelles technologies. Secundo, Les concentrations geographiques existantes de l'offre de capital-risque entravaient la creation de nouvelles entreprises innovatrices dans les zones defavorisees de l'Union. Cet article cherche a presenter les resultats mis a jour d'une etude de ce programme faite en 1992. On examine la dynamique interne comparative du fonds. Le programme a reussi a encourager l'investissement prive dans de nouvelles entreprises innovatrices, basees sur les nouvelles technologies. Cependant, on remet en question la capacite des fonds a repondre aux objectifs commerciaux et/ou regionaux a plus long terme etant donne le probleme de leur viabilite economique lie a la notion d'echelle. MURRAY G. C. (1998) Eine grundsatzliche Antwort auf regionale Ungleichheiten im Angebot von Risikokapital fur auf neuer Technologie aufgebaute Firmen in der Europaischen Union: das europaische Saatkornkapitalfond Project, Reg. Studies 32 , 405-419. Das europaische Saatkornkapitalfond Versuchsprojekt (1988-1995)stellte eine Antwort der europaischen Kommission auaf zwei grundlegende Anliegen dar: (1) private Risikokapitalfirmen in Europa zogen sich zunehmend von der Finanzierung und Unterstutzung neu gegrundeter, in Anfangen begriffener und vorallem von auf Technologie aufgebauten Unternehmen zuruck, und (2) bestehende raumliche Konzentrationen beim Aufbringen von Risikokapital beeintrachtigten die Bildung neuer, innovativer Geschaftsunternehmungen in weniger entwikkelten Gebieten der Union. Dieser Aufsatz stellt die auf den neuesten Stand gebrachten Ergebnisse einer Studie dieses Projektes vom Jahre 1992 vor. Die vergleichsweise interne Dynamik der Saatkornfonds wird untersucht. Das Projekt verwirklichte das ihm gesteckte Ziel, private Investierungen in innovativen, auf Technologie aufgebauten jungen Firmen zu ermutigen. Die anhaltende Fahigkeit des Fonds, das Kapital fur langerfristige kommerzielle und/oder regionale Entwicklungsobjekte aufzubringen, wird jedoch angesichts der Grossenordnung bezogenen Probleme wirtschaftlicher Realisierbarkeit wegen in Frage gestellt.

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    Article provided by Taylor & Francis Journals in its journal Regional Studies.

    Volume (Year): 32 (1998)
    Issue (Month): 5 ()
    Pages: 405-419

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    Handle: RePEc:taf:regstd:v:32:y:1998:i:5:p:405-419
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    1. Hustedde, Ronald J. & Pulver, Glen C., 1992. "Factors affecting equity capital acquisition: The demand side," Journal of Business Venturing, Elsevier, vol. 7(5), pages 363-374, September.
    2. Gorman, Michael & Sahlman, William A., 1989. "What do venture capitalists do?," Journal of Business Venturing, Elsevier, vol. 4(4), pages 231-248, July.
    3. D E Keeble, 1989. "High-technology industry and regional development in Britain: the case of the Cambridge phenomenon," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 7(2), pages 153-172, April.
    4. Macmillan, Ian C. & Siegel, Robin & Narasimha, P. N. Subba, 1985. "Criteria used by venture capitalists to evaluate new venture proposals," Journal of Business Venturing, Elsevier, vol. 1(1), pages 119-128.
    5. Hall, John & Hofer, Charles W., 1993. "Venture capitalists' decision criteria in new venture evaluation," Journal of Business Venturing, Elsevier, vol. 8(1), pages 25-42, January.
    6. Sapienza, Harry J., 1992. "When do venture capitalists add value?," Journal of Business Venturing, Elsevier, vol. 7(1), pages 9-27, January.
    7. Macmillan, Ian C. & Zemann, Lauriann & Subbanarasimha, P. N., 1987. "Criteria distinguishing successful from unsuccessful ventures in the venture screening process," Journal of Business Venturing, Elsevier, vol. 2(2), pages 123-137.
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