Estimating additionality and leverage: between public and private sector equity finance in Ireland (2000 – 2002)

Mark Hart, Helena Lenihan

Research output: Contribution to journalArticle

Abstract

This paper aims to contribute to the debate about the role of the public sector in stimulating greater use of private sector equity for business start-up and growth in two ways. First, to examine the extent to which the provision of public sector equity finance enables individual firms to raise additional funds in the private sector market place. Second, to consider the methodological implications for an economic impact assessment of industrial policy interventions (especially those which include an equity component) at the level of the individual firm. We assess the extent to which there may be indirect positive effects (externalities) associated with public sector financial assistance to individual firms and if so how they distort standard evaluation methodologies designed to estimate the level of additionality of that support. The paper draws upon the results of a recent study of the impact of Enterprise Ireland (EI) financial assistance to indigenous Irish industry in the period 2000 to 2002. The paper demonstrates that a process of re-calibration is necessary in estimates of economic impact in order to account for these positive externalities and the result in this study was a ‘boost’ to additionality. In operational and conceptual terms, the study underlines the importance of the relationship between private and public sector sources of equity finance as an important dynamic in the attempt by industrial and regional policy to stimulate the number of firms with viable investment proposals accessing external equity finance.
LanguageEnglish
Pages331-351
Number of pages21
JournalVenture Capital
Volume8
Issue number4
DOIs
Publication statusPublished - Oct 2006

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Equity finance
Additionality
Public and private sector
Leverage
Ireland
Public sector
Private sector
Economic impact
Equity
Industrial policy
Positive externalities
Industry
Calibration
Evaluation methodologies
Regional policy
Externalities
Business start-up
Impact assessment

Keywords

  • equity finance
  • public policy
  • additionality

Cite this

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Estimating additionality and leverage : between public and private sector equity finance in Ireland (2000 – 2002). / Hart, Mark; Lenihan, Helena.

In: Venture Capital, Vol. 8, No. 4, 10.2006, p. 331-351.

Research output: Contribution to journalArticle

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