The UK clearing banks and the informal venture capital market

Changes in the macroeconomy, combined with changes in bank lending practices, have created a more difficult financing environment for small businesses in the UK in the 1990s. Notes increasing encouragement for small businesses to seek venture capital as an alternative, but points out evidence both of a lack of venture capital for firms seeking less than £500,000 and a belief that small firms are unwilling to seek venture capital. Challenges these views and points out the advantages to the banks of an informal venture capital market. Considers ways for banks to encourage such activity.