The Failed Venture Capital Experiment: 1976–1991

Paul Jowett and Francoise Jowett

Chapter 3 in Private Equity, 2011, pp 15-23 from Palgrave Macmillan

Abstract: Abstract By the mid-1970s the state, whose focus for some years had been upon providing support for companies too small to be served by the likes of the DBG and its competitors, turned its attention to “young” and “technological” companies. No history of private equity in Germany can avoid mention of the ill-fated government-bank initiated Deutsche Wagnisfinanzierungsgesellschaft which was the result of this initiative. Ralf Becker and Thomas Hellmann in their paper The Genesis of Venture Capital — Lessons from the German Experience do an excellent job of analysing why this experiment failed. Becker and Hellmann explain the background to this unusual initiative: Throughout the sixties, there was a growing concern about an equity gap in Germany. While in the mid-sixties a typical German company still had 35% equity, this percentage had fallen to 25% by the early 1970s. Small and medium sized companies had even less equity, about 20%. After the first oil shock, the problem became even more pressing as higher interest rates burdened the balance sheets of companies.1

Keywords: Venture Capital; Private Equity; Venture Capital Fund; Portfolio Company; Entrepreneurial Team (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-30866-4_3

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DOI: 10.1057/9780230308664_3

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