Venture capital and regional development: Towards a venture capital 'system'

This paper provides a critical review of UK government proposals to develop venture capital funds in the English regions to address the 'equity gap'. It argues that there is currently an adequate supply of equity-type funding under 250, 000. The real equity gap is between the more informal, packaged finance structures and the formal venture capital market which is dominated by MBOs and MBIs. It is argued that the creation of strong venture capital markets in the regions requires the close co-ordination between all the various actors in the system at regional and national levels. Regional Development Agencies have the tools to enable them to perform this co-ordinating task.