The Public Venture Capital Challenge: The Australian Case

Jenkins found his most fearsome and effective ally in Maximino Ávila Camacho, brother of future president Manuel Ávila Camacho, who helped him resist President Cárdenas’s plan to expropriate Atencingo. Jenkins largely bankrolled Maximino’s gubernatorial campaign of 1936 and made loans to his administration. In turn, when Doña Lola convinced Cárdenas to confiscate Atencingo, Maximino countered with a plan that gave the land to a peasant cooperative while letting Jenkins retain the mill, the plantation’s profit center. Still, the Cárdenas era was a tricky time for the business elite, so Jenkins diversified his holdings, making venture-capital entrées into banking, the automotive sector, and film and returning to the textile sector. In all cases he hid his participation, from both the public and the IRS, through the use of prestanombres (straw men). Jenkins’s move toward nationwide influence also emerged in politics, as he made a huge covert loan to Manuel’s presidential campaign.

Download Full-text

Public Venture Capital in a Regional Economy: The Welsh Development Agency, 1976–1994

Enterprise & Society ◽

10.1017/eso.2019.15 ◽

2019 ◽

Vol 20 (4) ◽

pp. 978-1006 ◽

Cited By ~ 2

Author(s):

LEON GOOBERMAN ◽

TREVOR BOYNS

Keyword(s):

Venture Capital ◽

Financial Performance ◽

Market Failure ◽

Regional Economy ◽

Commercial Activity ◽

Development Agency ◽

Equity Investments ◽

The Uk ◽

Public Venture Capital

Between 1976 and 1994 the UK Government’s Welsh Development Agency made 2,304 loan and equity investments totaling £117.8 million. The agency aimed to address difficulties faced by firms in obtaining finance, and such intervention was justified by the market failure and spillover hypotheses. This article assesses the agency’s investment activities against both justifications. It finds that while some investments succeeded, the portfolio’s financial performance was poor, and the agency did not address widespread market failure. Evidence of spillover returns existed, but cannot be quantified accurately across the portfolio. The article argues that the agency’s two venture capital objectives, to assemble a profitable portfolio and to grow employment levels through boosting commercial activity, were incompatible within a poorly performing regional economy. Although spillovers can justify public venture capital in such economies, expectations as to financial performance should be realistic in the absence of an ecosystem that facilitates demand for capital.

Download Full-text