The New Financial Factory for Innovation Economic Development
Thomas E. Vass
The Private Capital Market
August 29, 2009
The Journal of Financial Transformation, pp. 37-41, August 2009
Our interest in writing this article is to create a bridge between the scholarly and academic research on technological innovation and a private sector, for-profit business model that implements the ideas on small business innovation and entrepreneurship, primarily in metro regional economies.
Both Moles (2008) and Sneyers (2008) have proposed ideas about 'manufacturing' private capital market securities that could be used by new ventures and existing firms that were raising growth capital to support innovation. Their ideas for new varieties of securities would work well if they were part of a larger strategy of regional innovation economic development. The securities issued by individual firms would be seen within the context of a vibrant, full-service regional capital market whose goal was the continuing commercial viability of the regional firms.
In an ideal regional private capital market, the new securities would allow for subsequent investments, as capital gains were reinvested back into the regional economy. In other words, rather than viewing the new securities from the perspective of a single company attempting to attract business angels or venture capitalists, the success of the new securities would be viewed from the contribution they make to the self-renewing and self-sustaining economic growth of regions.
Most investments in innovation depend on a high degree of trust in a 50-mile radius of the participants in the capital markets. The new securities would be most successful when they were embedded in vibrant regional capital markets that are characterized by business social networks built upon a high level of trust within the regional economy. Financial institutions in each region would become important partners in the regional capital markets.
Number of Pages in PDF File: 5
Keywords: Business capital, regional capital markets, financial factory, innovation, jobs
JEL Classification: L16, M13, O16, O31, O32, O33, O34, O38, R12, R15, R58,Accepted Paper Series
Date posted: August 30, 2009
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