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Public venture capital in a regional economy: The Welsh Development Agency 1976-1994

Gooberman, Leon ORCID: and Boyns, Trevor ORCID: 2019. Public venture capital in a regional economy: The Welsh Development Agency 1976-1994. Enterprise and Society 20 (4) , pp. 978-1006. 10.1017/eso.2019.15

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Between 1976 and 1994 the UK Government’s Welsh Development Agency made 2,304 loan and equity investments totaling £117.8 million. The agency aimed to address difficulties faced by firms in obtaining finance, and such intervention was justified by the market failure and spillover hypotheses. This article assesses the agency’s investment activities against both justifications. It finds that while some investments succeeded, the portfolio’s financial performance was poor, and the agency did not address widespread market failure. Evidence of spillover returns existed, but cannot be quantified accurately across the portfolio. The article argues that the agency’s two venture capital objectives, to assemble a profitable portfolio and to grow employment levels through boosting commercial activity, were incompatible within a poorly performing regional economy. Although spillovers can justify public venture capital in such economies, expectations as to financial performance should be realistic in the absence of an ecosystem that facilitates demand for capital.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Publisher: Cambridge University Press
ISSN: 1467-2227
Date of First Compliant Deposit: 7 January 2019
Date of Acceptance: 19 December 2018
Last Modified: 29 Oct 2022 08:44

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