Capabilities, policy and institutions in the emergence of venture capital in the UK and US

Siepel, Joshua (2011) Capabilities, policy and institutions in the emergence of venture capital in the UK and US. Doctoral thesis (DPhil), University of Sussex.

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Abstract

Venture capital (VC) is widely perceived by UK policymakers to be a key
requirement for the growth and development of successful and innovative early
stage firms. This thesis examines how government policy has impacted the
emergence of VC sectors in the UK and US. Using historical, qualitative and
quantitative methods it argues that the public rationale behind UK policy has been
largely framed in ways that underestimate the importance of capabilities, demand
for capital, and institutional differences.

The thesis examines venture capitalists’ key supply‐demand relationships: with
funded firms; with limited partners; and with the markets that allow exit via IPO.
It argues that the US VC sector has developed unique capabilities enabling the
assembly of complementary assets to bring firms to successful IPO. In the UK,
policy aimed at addressing the ‘equity gap’ has focused on the provision of capital
rather than developing the capabilities that have characterised the US sector. We
perform quantitative analysis examining the effectiveness of recent UK schemes at
providing VC funding to small firms. Drawing upon two proprietary datasets,
including one new hand‐collected dataset of all investments made under the
Venture Capital Trust scheme, the thesis provides new quantitative evidence on
the success of government policy interventions, demand for capital by firms, and
investment exit opportunities.

The thesis then compares principal‐agent and evolutionary framing perspectives
of the VC sector, arguing the evolutionary view explains some nuances more
readily than a pure principal‐agent view. It concludes by discussing the theoretical
and policy implications of the research.

Item Type: Thesis (Doctoral)
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit
Subjects: H Social Sciences > HF Commerce > HF5001 Business
H Social Sciences > HG Finance
H Social Sciences > HG Finance > HG3691 Credit. Debt. Loans
Depositing User: Library Cataloguing
Date Deposited: 06 May 2011 09:47
Last Modified: 14 Aug 2015 12:52
URI: http://sro.sussex.ac.uk/id/eprint/6899

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