Barriers to investment in the informal venture capital sector

C.M. Mason, R.T. Harrison

Research output: Contribution to journalArticle

110 Citations (Scopus)

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.
LanguageEnglish
Pages271-287
Number of pages16
JournalEntrepreneurship and Regional Development
Volume14
Issue number3
DOIs
Publication statusPublished - Jul 2002

Fingerprint

Informal venture capital
Finance
Willingness
Investment portfolio
Investment criteria
Capital markets
Tax incentives
Government intervention
Business angels
Proportion
Entrepreneurs
Small firms
Supply side
Shortage
Start-up
Politicians
Equity finance

Keywords

  • venture capital
  • business angels
  • investment potential
  • investment criteria
  • small firms policy

Cite this

Mason, C.M. ; Harrison, R.T. / Barriers to investment in the informal venture capital sector. In: Entrepreneurship and Regional Development. 2002 ; Vol. 14, No. 3. pp. 271-287.
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Barriers to investment in the informal venture capital sector. / Mason, C.M.; Harrison, R.T.

In: Entrepreneurship and Regional Development, Vol. 14, No. 3, 07.2002, p. 271-287.

Research output: Contribution to journalArticle

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