Engineering a Venture Capital Market: Lessons from the American Experience

Abstract

for helpful comments. I owe a special debt to Zohar Goshen, whose work on the Israeli venture capital market was invaluable.

Assessing the impact of public venture capital programmes in the United Kingdom: Do regional characteristics matter?

“…Governmental bodies around the world are paying increasing attention to the finance of such innovative firms through different types of indirect and direct measures (Poterba, 1989, Lerner, 1999, Gompers and Lerner, 2001, Gilson, 2002. Indirect measures aim at creating proper economic, institutional and regulatory frameworks within which markets can effectively channel resources to new and innovative enterprises (OECD, 1997).…”

“…Such schemes can be either directed to small and medium enterprise, as in the cases of public funds directly invested in individual portfolios of SMEs, or indirectly channeled to venture capital firms. In this latter case, indirect support occurs since the government (or other regional or local public authorities) invests as a limited partner in one or more professional venture capital funds (Poterba, 1989, Gilson, 2002, Kanniainen and Keuschnigg, 2004, Avnimelech and Teubal, 2006, Cumming, 2007. The involvement of commercially motivated, private sector investors acting as "agents" on behalf of government "principals" in managing so-called "hybrid funds" has now become the predominant modus operandi in several countries of the world (Jaaskelainen et al, 2007).…”

Public policy and the creation of active venture capital markets

“…This programme, which invested several billion dollars, was largely motivated by the fear that insufficient financing was available to innovative small firms. 6 Public programmes aimed at increasing the supply of venture capital have also been implemented in several emerging economies, from Chile to India (Carter, Barger, and Kuczynski (1996), Gilson (2003), Lerner and Schoar (2005)). In Israel, the Yozma programme, started in 1992, provided 100 million dollars of public funding to attract private funds for over 150 millions (Avnimelech and Teubal (2002)).…”

Early-stage venture capital in South Africa: Challenges and prospects

“…This is also the stage when university research can be capitalised upon and be developed further. The significant role played by the VC market in innovation and in driving economic growth has been identified by a number of authors (Sahlman, 1990;Gilson, 2003;Kenney, Han & Tanaka, 2002;Dossani & Kenney, 2002). VC provides the necessary financing that enables businesses to bring ideas to market and expand (Lerner, Moore & Shepherd, 2005).…”

“…VC-backed firms have not only been an important engine of economic growth and job creation, but they have also been responsible for commercialising cutting edge science such as biotechnology advancements and the internet (Gilson, 2003). Thus, according to the 2008 study by the South African Venture Capital & Private Equity Association (SAVCA), VC plays a necessary and critical role in the innovation value chain.…”