Issue 22: January 2003

Tech firms need venture capital at
start-up stage, conference agrees 

Venture capital will help to promote innovation in the developing world but only if it is available to small and medium-sized technology-based enterprises at the seed and start-up stage, delegates to a recent international conference concluded.

The International Conference on Financial Systems, Corporate Investment in Innovation and Venture Capital, jointly organized by UN University Institute for New Technologies (UNU/INTECH) and EU-DG research, was held at the Centre for European Policy Studies in Brussels November 7-8 last year.

The aim of the conference was to provide comparative analysis of the emerging links between corporate innovation in new technologies and local financial systems in developed and developing countries.

Specifically, delegates set about mapping technological and organisational changes in the two main poles of interaction – new forms of financial intermediation and industry in the current context of industrial restructuring and services deregulation.

Among the conclusions reached at the conference:

• Venture capital is an important source of institutional support for new-technology-based ventures especially in their early stage. Unless emphasis should be placed on financing technology-based small and medium enterprises at their seed and start-up stage, venture capital will be less of an incentive to innovation.

• Venture capital firms require a strong public policy support in terms of tax and other financial incentives. They also require proper exiting mechanisms such as a well developed stock market and an adequate supply of well trained  professionals especially at the 'due diligence stage'

• A distinguishing feature of venture capital finance is the additional support provided by the investing firms to the firm they invest in.

The conference, directed by Dr. Anthony Bartzokas and Dr. Sunil Mani of UNU/INTECH, was organised into four sessions with a total of 14 papers and a final round table discussion.  Main presenters were Bronwyn Hall (University of California, Berkeley), William Lazonick (INSEAD, Paris), Martin Kenney (University of Californmia, Davis), Colin Mayer (Oxford University), Michael Stolpe (Kiel University of the World Economy), Dorothee Rivaud-Danset (University de Reims and CEPN-CNRS), Sophie Manigart and Katleen Baynes (Ghen University), Clement Wang (National University of Singapore), Sunil Mani and Anthony Bartzokas  (UNU/INTECH), Steve White (INSEAD, Paris), B.Bowonder (Administrative Staff College of India, Hyderabad), Gil Avnimelech and Morris Teubal (Hebrew University of Jerusalem), Laszlo Szerb and Attila Varga (University of Pecs, Hungary), Gonseli Baygan (OECD), Lawarence M. Rausch (National Science Foundation, USA) 

The proceedings of the conference are being edited into a book, Financial Systems, Corporate Investment In innovation and Venture Capital, by Anthony Bartzokas and Sunil Mani expected to be released this year.

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