Venture Capital, the Regions and Public Policy: The United Kingdom since the Post-2000 Technology Crash

Abstract

Mason C. and Pierrakis Y. Venture capital, the regions and public policy: the United Kingdom since the post-2000 technology crash, Regional Studies. The geography of venture capital in the United Kingdom has been shaped since the year 2000 by a significant increase in public sector venture capital funds. Venture capital investments are now less concentrated in the South East. However, investment activity in the Midlands and North is dominated by the public sector. Deal sizes in these regions are small. Venture capital, measured by the total amount invested, remains over-concentrated in London and the South East where private sector investors continue to dominate. This paper concludes by questioning whether this increased dependence of Northern regions on public sector venture capital matters.

Mason C. and Pierrakis Y. 风险资本，区域及公共政策：2000 年技术危机之后的英国，区域研究。英国风险资本的地理学成形于 2000 年，由公共部门风险资本基金的增加引起。风险投资目前在东南部分布较少。然而，米德兰与英国北部的投资活动由公共部门所主导。上述区域内的成交率较低。以投资总量衡量的风险投资过于集中于伦敦地区，而私有部门投资持续主导了英国东南部地区。文章结尾就北部地区对于公共部门风险投资的依赖性是否会产生影响提出了质疑。

风险资本 区域 区域政策 中小型企业

Mason C. et Pierrakis Y. Le capital-risque, les régions et la politique publique: le Royaume-Uni depuis le krach technologique de l'après-2000, Regional Studies. La géographie du capital-risque au Royaume-Uni a été influencée depuis l'an 2000 par une augmentation sensible du capital-risque dans le secteur public. De nos jours, les investissements sous forme de capital-risque sont moins concentrés dans le Sud-Est. Cependant, c'est le secteur public qui explique dans une large mesure l'investissement dans les Midlands et dans le Nord, le montant des opérations dans ces régions-là s'avérant faible. Le capital-risque, en termes du montant global investi, reste surconcentré à Londres et dans le Sud-Est où les investisseurs du secteur privé ne cesse de prédominer. Pour conclure, on met en doute l'importance de la dépendance accrue du Nord du capital-risque du secteur public.

Capital-risque Régions Politique régionale Entreprises petites et moyennes

Mason C. und Pierrakis Y. Beteiligungskapital, die Regionen und öffentliche Politik: Großbritannien seit dem Technologie-Crash nach dem Jahr 2000, Regional Studies. Die Geografie von Beteiligungskapital in Großbritannien ist seit dem Jahr 2000 von einer signifikanten Erhöhung der Beteiligungskapitalfonds des öffentlichen Sektors geprägt. Im Südosten sind Investitionen von Beteiligungskapital inzwischen weniger konzentriert. In den Midlands und im Norden hingegen wird die Investitionsaktivität vom öffentlichen Sektor dominiert. Die Umfang der Geschäfte fällt in diesen Regionen gering aus. Gemessen am investierten Gesamtbetrag bleibt das Beteiligungskapital in London und im Südosten überkonzentriert, wo Investoren aus dem Privatsektor weiterhin dominieren. Der Beitrag schließt mit der Frage, ob diese erhöhte Abhängigkeit der nördlichen Regionen von Beteiligungskapital des öffentlichen Sektors von Belang ist.

Beteiligungskapital Regionen Regionalpolitik Kleine und mittelständische Unternehmen

Mason C. y Pierrakis Y. Capital de riesgo, las regiones y la política pública: el Reino Unido desde el final de la crisis tecnológica de 2000, Regional Studies. La geografía del capital de riesgo en el Reino Unido se caracteriza desde el año 2000 por un aumento significativo en los fondos de capital de riesgo del sector público. Las inversiones del capital de riesgo están ahora menos concentradas en el sureste del país. Sin embargo, la actividad inversora en el centro y norte está dominada por el sector público. Las inversiones en estas regiones son pequeñas. Al cuantificar el capital de riesgo en función de la cantidad total invertida, observamos que todavía está demasiado concentrado en Londres y el sureste del país donde siguen dominando los inversores del sector privado. Concluimos este artículo cuestionando si es importante esta creciente dependencia de las regiones del norte del capital de riesgo del sector público.

Capital de riesgo Regiones Política regional Pequeñas y medianas empresas

Keywords:

• Venture capital
• Regions
• Regional policy
• Small and medium-sized enterprises

JEL classifications:

• G2
• G3
• R1
• R5

Acknowledgement

The authors are grateful to the Editors and two anonymous referees for helping them to improve the structure and positioning of this paper.

Notes

An important distinction is made between venture capital and private equity. Venture capital focuses on investing in new businesses, whereas private equity focuses on restructuring, management (leveraged) buyouts and other forms of ownership change in established companies.

For an early critique of the scheme, see Mason and Harrison (2003).

For details of the funds to be established in the North East, see http://www.onenortheast.co.uk/page/jeremie/index.cfm/.

This source was also used by Pierrakis and Mason (2008). Some of the figures reported here may differ slightly from those cited by Pierrakis and Mason: (1) the Library House database is live and so is continually being updated; and (2) further cleaning of the data by the authors. However, these changes do not change the observed trends and the argument made by Pierrakis and Mason.

Investments of £50 000 or more reported by Library House as a proportion of those in the BVCA statistics have risen from 33% in 2000 to over 50% since 2005.

However, there is no source that provides a comprehensive coverage of angel investments (Mason and Harrison, 2008).

Unfortunately, the data do not enable a differentiation to be made between investments made by public sector co-investment funds and ad-hoc co-investments made by other types of public sector venture capital funds.

Yorkshire's location quotient was 0.49 in 2005, 1.62 in 2006 and 0.38 in 2007. East Midland's location quotient was 2.41 in 2005, 0.57 in 2006 and 0.64 in 2007.

The pooled interim rate of return across the nine funds that were recipients of the UK High Tech Funds in June 2008 was –9.7% (net of fund management costs), with only one of the funds showing a positive rate of return. Comparable private-technology funds show a pooled average return of –5.2% at that date. The pooled rate of return across the nine finds at December 2008 was –15.7%, with all funds showing negative returns. Private funds of a similar size and vintage show a –0.4% return. However, these funds are subject to fewer investment restrictions (National Audit Office, 2009).