The European union's support for new technology‐based firms: An assessment of the first three years of the European seed capital fund scheme

Abstract

In 1988, the European Commission launched a pilot programme, the European Seed Capital Fund Scheme, designed to create 24 new seed capital funds in the 12 member states and to increase the availability of equity finance to innovative start‐up and early‐stage enterprises. The findings of a pan‐European assessment carried out in the spring of 1992 on 21 of the 22 supported funds and 40 of their investee companies are presented. The actions of the funds have allowed additional resources to be directed to young technology‐based firms. However, the research findings also suggest that the majority of supported funds are under‐capitalized which will result in major problems of financial viability in the medium term. The research also questions the sufficiency of supply side policies alone to address issues of regional ‘equity gaps’ particularly related to the support for NTBFs within Europe.