|dc.contributor.author||Maula, Markku V. J.||en_GB
The availability of risk capital in all its variants is a critical resource for a modern
and adaptive economy. The effective exploitation of new knowledge requires a
commercialisation process that is conditional on informed, skilled and risk
accepting investors both as individuals (Business Angels) and professionals
(Venture Capitalists). Similarly, the restructuring and reinvigoration of large
established corporate businesses, often on an international or global scale, has
been materially assisted by the advent of a finance industry focused on
Management Buy-Out activity.
In Europe, the provision and use of equity-based financing is both patchy across
countries and materially lags behind the levels of development seen in the USA.
Both inefficiencies in the supply of venture capital and in the demand from
informed and growth-oriented entrepreneurs has resulted in parochial and
nationally focused risk capital industries that are individually and collectively
weaker than their US competitors.
Global trends in both the provision by and demands of institutional finance
seeking more and larger management buy-out opportunities, as well as the
increasingly borderless identity of new technology paradigms, is threatening the
relevance of Europe’s current, predominantly country-based model of private
equity. There is a real need to develop a more pan-European private equity
In creating an Entrepreneurial Europe, policy makers need to recognise that:
1. Business Angels are a fundamental and early building block of an innovative
and adaptive enterprise community. For early-stage ventures, they are
collectively more important than venture capital. The national fiscal
environment should incentivise and reward risk taking by entrepreneurs and
their early-stage financial backers.
2. The fiscal environment should allow inter-country tax transparency. The
costs associated with avoiding multiple taxation by private equity firms are a
material barrier to a European market for risk capital.
3. Government should work to encourage the involvement of private and
commercial investors rather than seeking to substitute for their unique skills
by acting as a direct investor of public monies into new enterprises. Where
government supports ‘hybrid’ venture capital funds by co-investing, it should
stipulate that such funds must be of a commercially viable scale.
4. Governments themselves can be highly entrepreneurial. Yet, inter-country
learning from both good and bad enterprise policy initiatives is poor and
should be addressed by greater international contact between policy makers
and academic experts.||en_GB
|dc.description.sponsorship||Finnish Prime Minister’s Office & Economic Council of Finland||en_GB
|dc.identifier.citation||Murray, G. C., Maula, M. (2006) Risk Capital for World Class Companies: Challenges for European Policy, Brief to the Finnish Prime Minister’s Office in preparation for the Finnish Presidency of the European Commission 2006.Helsinki. 16pp.||en_GB
|dc.publisher||Economic Council of Finland||en_GB
|dc.title||Risk capital for growing world-class companies: challenges for European policy||en_GB
|dc.description||Brief to the Finnish Prime Minister’s Office in preparation for the Finnish Presidency of the European Commission 2006.||en_GB