Tweets
Removing Market Failures in Equity Finance Markets
What our client wanted
There are a range of Government initiatives targeted at removing market failures in finance markets in order to ensure that UK entrepreneurs and businesses are able to access the finance they need to start up or grow. As part of a wider evaluation strategy, BIS commissioned ekosgen to examine the effectiveness of two of its equity fund programmes – the UK High Technology Fund of Funds and Community Ventures Fund (Bridges).
The overall aim of the evaluation was to assess the effectiveness of each scheme against its objectives. In so doing it addressed a range of detailed issues such as the extent to which the UKHTF demonstrated to investors and the venture capital industry that commercial returns can be made on early stage, high technology businesses. With regards to Bridges, the study examined the extent to which it delivered economic and social benefits in its target areas, that is, the 25 per cent most disadvantaged areas of England. The influence of the two programmes in driving improvements in the operation of financial markets was also examined as was their role in increased the supply of equity finance. With regards to recipient businesses, the study examined the impact of the two programmes on their growth and development as well as the wider economy.
What we did
The project assessed the effectiveness of each Fund against its objectives by collecting qualitative evidence from fund managers, key stakeholders and industry experts together with tele-depth interviews with recipient businesses.
BIS put in place a comprehensive evaluation strategy for its equity finance programmes and an econometric study based on a combination of quantitative survey data and matched data sources was already underway. We were commissioned specifically to provide a qualitative assessment of both Bridges and the UKHTF. Alongside analysis of programme literature, we undertook around 50 in-depth, semi-structured interviews. These were recorded, transcribed, and analysed to provide insights not gathered previously about the investment decisions of Fund Managers and the way in which they managed their portfolios. Findings from the businesses interviews supported existing research about the wider benefits of associated with equity finance. Importantly, the research provided contextual insights explaining the underperformance of some of the funds, such as market conditions, the economy, and the role of fund managers.
What difference we made
These unique findings complement the Department’s quantitative studies and together enable it to better understand the performance of its equity finance programmes.