Venture capital, business angels and business innovation 

The role of venture capital in the growth of Silicon Valley has created the narrative that venture capital is essential for an economy to creative innovative businesses. This Insight Paper questions this narrative. We argue that the impact of venture capital depends on geographical context – success may not be transferable. Second, venture capital itself is changing with the emergence of new types of investors. Third, venture capital invests in a miniscule proportion of businesses in a narrow range of technologies and industries. Fourth, the effect of the focus of investors on achieving an exit is suggested as destroying value. And finally, the investment performance of venture capital raises questions about the ability of investors to select and nurture innovative businesses. This leads to a range of research suggestions to better understand the contribution of venture capital to UK innovation.   

A summary and full report is available via the download section of this page.