A policy response to regional disparities in the supply of risk capital to new technology based firms in the European Union: The European Seed Capital Fund Scheme

The European Seed Capital Fund Pilot Scheme (1988-95) was a European Commission response to two primary concerns that: (1) private venture capital firms in Europe were increasingly retreating from the financing and support of start-up, early-stage and, particularly, technology based enterprises; and (2) existing spatial concentrations in the supply of venture capital prejudiced the formation of new, innovative businesses in less economically developed regions of the Union. This paper presents the updated results of a study of this Scheme in 1992. The comparative internal dynamics of the Seed Funds are explored. The Scheme realized its goal of encouraging private investment into innovative, technology-based young firms. However, the continued ability of the funds to meet longer-term commercial and/or regional developmental objectives is questioned given scale-related problems of economic viability.