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Article

Richard Harrison and Colin Mason

Concern about the equity gap in the UK has existed for more than 60 years. Despite various government measures and institutional responses (e.g. the development of a…

Abstract

Concern about the equity gap in the UK has existed for more than 60 years. Despite various government measures and institutional responses (e.g. the development of a venture capital industry) an equity gap still persists. Current debate has recognized the role of the informal venture capital market as a source of risk capital for SMEs. Argues that this market is both inefficient and underdeveloped, due largely to information deficiencies which hinder contact between potential investors and entrepreneurs seeking finance. Against this background, identifies the role of business angel networks (BANs) as a key means of stimulating the flow of informational venture capital in the UK. In particular, a government scheme to provide pump‐priming assistance to establish five local BAN demonstration projects is shown to have achieved impressive results. However, with the recent emergence of a number of private sector BANs, the continued role of government is now being questioned. Further demonstrates that public sector BANs, operating on a local scale, are filling a different market niche from that of private sector BANs, which operate predominantly on a national scale. Concludes that the top priority for policy is to ensure that all parts of the UK are served by local BANs. An appropriate way forward might be to build on experimental networking arrangements between local, public sector BANs and national, privately operated BANs.

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International Journal of Entrepreneurial Behavior & Research, vol. 2 no. 2
Type: Research Article
ISSN: 1355-2554

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Article

Colin M. Mason and Richard T. Harrison

Changes in the macroeconomy, combined with changesin bank lending practices, have created a more difficult financingenvironment for small businesses in the UK in the…

Abstract

Changes in the macroeconomy, combined with changes in bank lending practices, have created a more difficult financing environment for small businesses in the UK in the 1990s. Notes increasing encouragement for small businesses to seek venture capital as an alternative, but points out evidence both of a lack of venture capital for firms seeking less than £500,000 and a belief that small firms are unwilling to seek venture capital. Challenges these views and points out the advantages to the banks of an informal venture capital market. Considers ways for banks to encourage such activity.

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International Journal of Bank Marketing, vol. 14 no. 1
Type: Research Article
ISSN: 0265-2323

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Abstract

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Reflections and Extensions on Key Papers of the First Twenty-Five Years of Advances
Type: Book
ISBN: 978-1-78756-435-0

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Article

Wing Lam

The aim of this paper is to make sense of the “funding gap” by exploring how and why informal entrepreneurial finance is made available to entrepreneurs. By challenging…

Abstract

Purpose

The aim of this paper is to make sense of the “funding gap” by exploring how and why informal entrepreneurial finance is made available to entrepreneurs. By challenging the epistemological and ontological assumptions of the “funding gap”, an enactment perspective of entrepreneurial finance, supported by a social constructionist stance, is proposed in this paper.

Design/methodology/approach

The study on which this paper reports was conducted through a longitudinal fieldwork process. Networks in two Chinese cities, Shanghai and Hong Kong, were chosen because of their differences in institutional context yet exceptionally high level of entrepreneurial activities.

Findings

This paper highlights the active role entrepreneurs play in managing their financial needs in the process of new venture creation. The results show that entrepreneurs are actively managing the demand as well as supply of entrepreneurial finance to narrow the “funding gap”. Furthermore, individuals work to fill the funding gap by creating required start‐up capital. In other words, the “funding gap” is not static or concrete; rather it is dynamic, manageable and in many cases is within individuals' power and ability to overcome.

Practical implications

The findings of this paper are particularly important to all stakeholders, including policy makers, educators, researchers, entrepreneurs and nascent entrepreneurs.

Originality/value

This paper contributes to the conceptual, methodological and practical knowledge in advancing understanding of the “funding gap”. First, it provides insight into the relationship between entrepreneurs and their environment that shapes the “funding gap”. Second, the findings suggested that a positive, supportive enterprise culture can be particularly useful in driving individuals towards entrepreneurship. Third, in terms of methodology, the author argues that an “inside‐looking‐lout”, interpretive, multi‐stage fieldwork and network as unit of analysis is particularly distinctive in revealing the complex process of managing entrepreneurial finance in the process of new venture creation.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 16 no. 4
Type: Research Article
ISSN: 1355-2554

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Article

Truls Erikson

The purpose of this paper is to uncover the strategic nature of formal seed capital in Norway as opposed to equally sized venture capital firms.

Abstract

Purpose

The purpose of this paper is to uncover the strategic nature of formal seed capital in Norway as opposed to equally sized venture capital firms.

Design/methodology/approach

As the population of Norwegian seed capital firms is embedded in this study, a differential approach is taken when contrasting these seed capital firms with venture capital firms of approximately the same size.

Findings

The findings indicate that seed capital firms take higher market risk than their counterparts, and that they diversify to a larger extent than comparable venture capital firms. The latter appears to be a function of the former.

Originality/value

This study reviews previous categorizations of seed capital providers, henceforth building towards an overall taxonomy of seed capital.

Details

Journal of Small Business and Enterprise Development, vol. 12 no. 4
Type: Research Article
ISSN: 1462-6004

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Article

David Leece, Tony Berry, Jia Miao and Robert Sweeting

The purpose of this paper is to identify the key characteristics of the post‐investment relationship between the venture capital firm and its investee companies.

Abstract

Purpose

The purpose of this paper is to identify the key characteristics of the post‐investment relationship between the venture capital firm and its investee companies.

Design/methodology/approach

The research is a case study of a major UK venture capital firm using qualitative research to determine the key characteristics of the post‐investment relationship. The study is based on interviews with parties on both sides of the relationship.

Findings

While the results reflect the findings of the entrepreneurship and venture capital literature they also point to the importance of network growth and development for organizational learning in the venture capital industry, professionalization of investee firms and as a context in which the selection of the entrepreneur and the post investment relationship are set.

Research limitations/implications

The research has the limitation of most case studies that the results cannot readily be generalized, in this case to the wider population of venture capital firms. Confidentiality issues also limited the extent to which a longitudinal study could be conducted.

Practical implications

A better understanding of the post‐investment relationship can inform entrepreneurs in their pitch for funds and in their anticipation of the post investment relationship. This understanding can also assist venture capital firms in the management of this relationship.

Originality/value

The case study uses data from rare access to a venture capital firm. It also differs by interviewing both parties to the post‐investment relationship, that is venture capitalist and investee firm.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 18 no. 5
Type: Research Article
ISSN: 1355-2554

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Article

Kevin McNally

The availability of external equity finance is a key factor in thedevelopment of technology‐based firms (TBFs). However, although a widevariety of sources are potentially…

Abstract

The availability of external equity finance is a key factor in the development of technology‐based firms (TBFs). However, although a wide variety of sources are potentially available, many firms encounter difficulties in securing funding. The venture capital community, particularly in the UK, has done little to finance early stage TBFs and has failed to cater adequately for the specific value‐added requirements of these firms. Non‐financial companies have the potential to become an important alternative source of equity finance for TBFs through the process of corporate venture capital (CVC) investment. Based on a telephone survey of 48 UK TBFs that have raised CVC, examines the role of CVC in the context of TBF equity financing. Shows that CVC finance has represented a significant proportion of the total external equity raised by the survey firms and has been particularly important during the early stages of firm development. In addition, CVC often provides investee firms with value‐added benefits, primarily in the form of technical‐ and marketing‐related nurturing and credibility in the marketplace. Concludes with implications for TBFs, large companies, venture capital fund managers and policy makers.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 1 no. 3
Type: Research Article
ISSN: 1355-2554

Keywords

Abstract

Details

Angel Financing in Asia Pacific
Type: Book
ISBN: 978-1-78635-128-9

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Abstract

Details

International Journal of Entrepreneurial Behavior & Research, vol. 14 no. 5
Type: Research Article
ISSN: 1355-2554

Keywords

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Book part

Pascale Château Terrisse

The sector of interdependent venture capital in France will be detailed henceforth. We will try to understand why its investments deserve to be called ‘interdependent’.

Abstract

The sector of interdependent venture capital in France will be detailed henceforth. We will try to understand why its investments deserve to be called ‘interdependent’.

Details

Finance and Sustainability: Towards a New Paradigm? A Post-Crisis Agenda
Type: Book
ISBN: 978-1-78052-092-6

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