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Barriers to investment in the informal venture capital sector

Mason, C.M. and Harrison, R.T. (2002) Barriers to investment in the informal venture capital sector. Entrepreneurship and Regional Development, 14 (3). pp. 271-287. ISSN 0898-5626

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Abstract

Much of the government intervention into the market 'gap' for start-up and early-stage equity finance in the UK is based on the belief that the problem is on the supply side. Based on an analysis of the informal venture capital market this paper argues that there is no shortage of finance available. A survey of business angels reveals that many are willing to allocate a higher proportion of their investment portfolio to investments in unquoted companies, with recent tax incentives having a positive effect on their willingness to invest. Over 90% are currently looking to make more investments. However, there are constraints on their ability to invest: they do not see enough deals that meet their investment criteria, the majority of the investment proposals that they receive are of poor quality, and they are often unable to negotiate acceptable investment terms and conditions with entrepreneurs. The implication is that there is a need for further interventions by policy-makers to remove these barriers so that more small firms can take advantage of the substantial pool of angel finance that is available.

Item type: Article
ID code: 17962
Keywords: venture capital, business angels, investment potential, investment criteria, small firms policy, Economic History and Conditions, Finance
Subjects: Social Sciences > Economic History and Conditions
Social Sciences > Finance
Department: Strathclyde Business School > Hunter Centre For Entrepreneurship
Related URLs:
    Depositing user: Strathprints Administrator
    Date Deposited: 30 Apr 2010 18:23
    Last modified: 17 Jul 2013 00:01
    URI: http://strathprints.strath.ac.uk/id/eprint/17962

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