Publicly backed venture capital funds and business innovation: empirical analysis of venture capital backed firms in the UK regions

The research examines the role of publicly backed venture capital funds in fostering business innovation paying particular attention to the regional dimension of the UK venture capital market. In examining this relationship, the research empirically analyses the characteristics of 4117 investment deals made to 2359 companies which are based in the 12 UK regions, between 2000 and 2008. The econometric analysis suggests that obtaining investment from solely publicly backed VC funds is associated with a significant decrease in the likelihood of the recipient company to have a patent or to have applied for one. In contrast, obtaining syndicate investments from both the public and the private sector is associated with an increase in the likelihood of the company to have a patent or have applied for one, compared with those companies that receive investments solely from private VC funds. The research results also show that there are significant variations between regions in terms of the volume of patents of VC backed companies. The policy implications of these findings are discussed.