Financing young and innovative enterprises in Europe: Supporting the venture capital industry

To resume the main findings, industry data shows that, contrary to conventional belief, the European industry is not 'small' as compared to the US industry. Although the venture capital industry is clearly underdeveloped in continental Europe, it possesses the attributes of a mature industry in the UK. However, it appears that - all over Europe - venture capitalists essentially provide late-stage development capital, and there are few investments in start-up companies. Even if conclusions must be drawn with caution, these features of the European industry may advocate some government intervention. Of course, public support can take different forms, such as tax and regulatory changes or direct inflows of capital. Regulatory impediments to the industry should obviously be removed. In the case of direct inflows, past experience in the US and Europe points out the inadequacy of conventional tools such as loans or guarantee schemes for young innovative companies, and suggests that investments in private funds offer a better alternative.