The regional venture capital funds( RVCF)s were formed to address the problem of unavailability of investment in the equity gap. There are nine regional venture capital funds( RVCF)s in England each catering to the needs of a different region. RVCFs need to invest in their regional SMEs and boost their funds.
More on Regional Venture Capital Fund (RVCF)
Regional venture capital funds (RVCF)s are meant to serve the SMEs on an almost compulsory basis. They need to be the initial institutional investor.
In England the amount of initial investment from a regional venture capital fund faces a ceiling of �250,000. They can chip in with a further investment of �250,000. However, this is allowed only after a period of at least 6 months.
Regional venture capital funds (RVCF)s in England are also allowed to make investment in a company in sequential rounds with an aim to stop its dilution.
Importance of Venture Capital
The most important part of regional venture capital fund (RVCF) is the venture capital. Venture capital is the critical element in the formation of regional capital. It also aids in the process of regional industrialization.
Venture capital is needed to support the technological innovation bid of companies. Empirical evidence points to the importance of regional factors in industry investment and finance.
According to a statistical study venture capital is characterized by a host of features. They have a high degree of capital mobility across a spatial structure .Venture capital flows to the areas where it can earn the maximum returns. New funding sources of venture capital are seen to develop around well-established financial hubs as well as areas where ‘high-technology’ industries are located. Specific group of industries have specific requirements and specialized sources of venture capital are seen to cater to them.
The regional factor component of venture capital is also important. It helps in a number of ways like the following:
to decrease uncertainty
to minimize investment risk
to compensate for ambiguity in information
Capital mobility is enhanced, more often than not, due to the regional venture capital network as opposed to the characteristics of a free market.