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Venture capital

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Small Business and Entrepreneurship

Part of the book series: Macmillan Small Business Series ((SBUI))

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Abstract

The severity of the recession in the UK over the period 1989-92 and its consequent marked increase in the number of liquidations and insolvencies among small and medium-sized firms (SMEs) has added further impetus to the long-running debate on the appropriate financial structure for small firms. For over 60 years, since Macmillan’s 1931 governmental review of the state of finances of SMEs, a stream of academic and public enquires have cited the deleterious effects of a chronic shortage of long-term, risk capital to support the growth of the small firm sector. This shortage of risk capital or long-term equity within the balance sheet of small businesses, and the alternative reliance on security based lending, primarily bank overdrafts, have, it is argued, placed firms in a position of excessive vulnerability in the event of a downturn in sales or other threats to the firm’s profitability or, more critically, cash flow.

The author is grateful for the helpful and insightful observations made on this chapter by Chris Beresford, partner, KPMG, Corporate Finance.

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Authors
  1. Gordon Murray
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Editor information

Editors and Affiliations

  1. Cranfield University, UK

    Paul Burns (Chairman of Design for Learning Ltd and Director of the 3i European Enterprise Centre, Professor of Small Business Development) (Chairman of Design for Learning Ltd and Director of the 3i European Enterprise Centre, Professor of Small Business Development)

  2. University of Warwick, UK

    Jim Dewhurst (Chartered Accountant, extensive Commercial experience includes periods as company secretary and financial director) (Chartered Accountant, extensive Commercial experience includes periods as company secretary and financial director)

Copyright information

© 1996 Gordon Murray

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Murray, G. (1996). Venture capital. In: Burns, P., Dewhurst, J. (eds) Small Business and Entrepreneurship. Macmillan Small Business Series. Palgrave, London. https://doi.org/10.1007/978-1-349-24911-4_7

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