Venture capital beyond the financial crisis: how corporate venturing boosts new entrepreneurial clusters (and assists governments in their innovation efforts)

Abstract

In the aftermath of the financial crisis, governments seek to replicate the success of Silicon Valley’s venture capital industry to stimulate economic growth.1 There is a widespread belief that high-growth firms will fuel job creation after the recession. With these efforts, priority has been given to establishing alternative stock markets and portals that cater to high-growth companies, such as NASDAQ in the USA or the Alternative Investment Market (AIM) in the UK.2 It is true that venture capitalists typically prefer to exit high-growth ventures through an initial public offering (IPO), and entrepreneurs could recoup control over their companies after a successful IPO.3 It could, therefore, be argued that the design of an effective exit mechanism would eventually spur entrepreneurship. However, venture capitalists and entrepreneurs have been very well able to entirely bypass their local exchange when floating a company’s shares, resulting altogether in a disappointing outcome...