INTERNATIONAL PERSPECTIVES ON THE SUPPLY OF INFORMAL VENTURE CAPITAL

This paper presents the results of the first study of the informal venture capital market in the United Kingdom, and compares the characteristics and behaviour of informal investors in the U.K. and North America. Although similar to their U.S. counterparts in demographics (with the exception of age, as U.K. informal investors are significantly older than those in the U.S.), U.K. informal investors invest less, operate independently rather than in syndicated investments, have somewhat higher rate of return and capital gain expectations and are less satisfied overall with the performance of their portfolios. U.K. investors also receive information on and seriously consider more investment opportunities, but do not make any more investments than their U.S. counterparts. Overall, in comparison to the U.S. market, the U.K. venture capital market appears to operate less effectively, thereby reducing its potential contribution to venture financing. The paper concludes with a call for more extensive international comparative studies of informal venture capital as a first step to increasing both the breadth and depth of knowledge of the operation and characteristics of this market.