The impact of venture capital funding on the growth of small high technology manufacturing firms in the United Kingdom: a regional comparison of firms located in the South East of England and Scotland

Abstract

This thesis is a theoretical and empirical study of the impact of venture capital funding on the growth of small high technology manufacturing firms located in the South East of England and Scotland. In order to set the research in context, information is provided on the history of investment finance, public sector involvement in high technology companies and venture funding, and the emergence and structure of the United Kingdom venture capital industry visa- vis the United States example. This literature review, along with a consideration of the issues which prompted the research, lead to the formulation of seven principal hypotheses. These hypotheses are tested by means of data generated from two surveys, a postal questionnaire and personal interviews, both involving manufacturing firms in the high technology study industry. This information is supplemented by qualitative interviews with a small number of venture capital organisations. The principal areas of investigation include: the use of external finance, in general terms, by survey firms; the distribution and impact of venture capital finance within the study industry; and the unique role played by venture capital organisations in relation to other financial services. Explanations are also offered for the pattern of venture capital distribution according to the business plan content, and the attitude of the main founder towards ownership and control of the company. Finally, the thesis offers some conclusions and recommendations for theory, practice and policy based on the comparison of theoretical and empirical issues. Principally, these require a re-structuring of the United Kingdom venture capital industry.