The British Business Bank's role in facilitating economic growth by addressing imperfections in SME finance markets

Schans, Dan van der

doi:10.1080/13691066.2015.1021026

Cited by 18 publications

(13 citation statements)

References 16 publications

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“…The latter point suggests an important role for the British Business Bank (Mazzucato and Penna, 2014;Van der Schans, 2015) in monitoring and developing more effective design and operation of the ECFs. A key requirement is raising ECFs' profile (highlighted by fund managers); they are less known than VCTs, particularly amongst financial intermediaries outside of specialist VC networks, underlining Lerner's (2010) requirement to develop support services (accountants, lawyers, fundraisers).…”

Section: Discussionmentioning

confidence: 99%

“…From the VC scheme design perspective, Lerner (2010) stresses the importance of developing support and promotional networks, making them visible and accessible, linking different types of finance and financial intermediaries and avoiding duplication. This emphasises the umbrella role of state investment banks such as the German KfW 4 in operating technology funds (Grunderfonds) and managing the evolving finance escalator, highlighting the role that the new British Business Bank can play in achieving this in the UK (Breedon, 2012;Cumming, 2011;Gill, 2015;Mazzucato and Penna, 2014;Van der Schans, 2015).…”

Section: Design Theoriesmentioning

confidence: 99%

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An assessment of the business impacts of the UK’s Enterprise Capital Funds

Baldock

2016

Environ Plann C Gov Policy

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Recent European studies present persistently critical views of the under performance of government-backed venture capital (GVC) schemes when compared to their private sector counterparts. However, they assess the performance of outmoded funding models and fail to contextualise the economic development role of these schemes. This paper provides a contemporary assessment of the business impacts of the UK government's flagship Enterprise Capital Funds VC scheme in addressing the sub-£2 m equity finance gap facing young potential high-growth businesses requiring investments. Supply and demand-side evidence is presented from interviews with ECF fund managers, alternative private VCs, industry experts and surveys of successful and unsuccessful scheme applicants. We find that, despite the limitations of midscheme evaluation, Enterprise Capital Funds are addressing the UK equity gap and delivering business employment, revenue and innovation impacts. However, further progress is required in order to achieve optimal business exits and sustainable early stage private VC system impacts.

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Section: Discussionmentioning

confidence: 99%

Section: Design Theoriesmentioning

confidence: 99%

An assessment of the business impacts of the UK’s Enterprise Capital Funds

Baldock

2016

Environ Plann C Gov Policy

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“…The British Business Bank was established in 2013 to coordinate SME finance (Van der Schans, ), monitor finance gaps and developing financing instruments to create an effectively flowing U.K. finance escalator that encourages private investment, and support service development (Lerner, ). However, a considerable array of relevant government finance is not within its remit.…”

Section: Government Policy Post‐gfcmentioning

confidence: 99%

Finance pathways for young innovative small‐ and medium‐size enterprises: A demand‐side examination of finance gaps and policy implications for the post‐global financial crisis finance escalator

2019

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The paper addresses the persistent finance gaps facing young, innovative SMEs, by examining the financing pathways of 40 UK businesses in a post global financial crisis (GFC) environment.Using a unique combination of finance escalator and resource-based view theories four propositions are tested by examining: (i) early and growth stage development; (ii) innovation R&D investment horizons; (iii) the management resource base; (iv) finance gaps and their implications.The paper finds that successful financing strategies are emerging, using a mix of bootstrapping, collaboration and new emerging post-GFC finance escalator funding, which is heavily reliant on government interventions. It also pinpoints remaining finance gaps and the need for more cohesive financing and support policy to address these. KEY SENTENCEYoung, innovative U.K. small-and medium-size enterprises are developing successful financing strategies, using a mix of bootstrapping, collaboration, and new emerging post-global financial crisis finance escalator funding, which is heavily reliant on government interventions, but finance gaps still persist requiring more cohesive financing and support policy.

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“…The aim of support systems for the SME sector is to reduce the equity gap for small and medium-sized enterprises, however, neither the number of institutions of the business environment nor their capital resources may guarantee a large share in filling this gap. These systems include such instruments as: credit guarantees, loans, subsidies, venture capital and investments of angel investors (Baldock & Marson, 2015;Schans, 2015). Some studies even indicate that the use by an enterprise of one of these forms of funding increases banks' trust and reduces the barriers in obtaining commercial funding (Meuleman & De Maeseneire, 2012).…”

Section: Funding/equity Gapmentioning

confidence: 99%

The role of loan and guarantee funds in filling the funding gap for Small and Medium-sized Enterprises

Waniak-Michalak

2017

E-Finanse

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Research background. The analysis of the funding gap for SMEs and loan and guarantee funds' capability to fill this gap has been undertaken to assess the instruments used in Poland which are focused on the development of entrepreneurship. Methodology/methods. The funding gap for small and medium-sized enterprises is measured with the method of unfulfilled demand for funding and unawarded funding. The size of the gap is compared to the potential amount of the guarantees and loans granted by non-bank organisations in Poland dependent on the amount of capital held. Purpose of the article. The purpose of the article is to answer the research question of whether guarantee and loan funds in Poland play a significant role in filling the funding gap for small and medium-sized enterprises Findings & Value added Guarantee and loan funds are not able to fill the equity gap of SMEs in Poland due to low capital resources compared with needs, and an insufficient number of institutions offering non-bank funding. Also, the high risk attributed to loans granted to small and medium--sized entrepreneurs influences the low degree of utilisation of the capital already held, both by loan and guarantee funds. The unutilised capital is deposited in bank accounts and does not lead to the increase of the multiplier effect. The analysis concerns the specificity of the support system for SMEs in Poland and cannot be generalised to systems in other countries. However, the conclusions from the conducted analysis and the methodology of calculation of the equity gap may serve other researchers as a basis for creating their own theses and research hypotheses. JEL classification: M15, M21Chart 2: The number of companies maintaining simplified bookkeeping (flat rate and tax card) in the period

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The British Business Bank's role in facilitating economic growth by addressing imperfections in SME finance markets

Cited by 18 publications

References 16 publications

An assessment of the business impacts of the UK’s Enterprise Capital Funds

An assessment of the business impacts of the UK’s Enterprise Capital Funds

Finance pathways for young innovative small‐ and medium‐size enterprises: A demand‐side examination of finance gaps and policy implications for the post‐global financial crisis finance escalator

The role of loan and guarantee funds in filling the funding gap for Small and Medium-sized Enterprises

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