The New Sponsor States: Economic Nationalism & Venture Capital in Quebec and Scotland, 1990-2017

Abstract

Given the importance that entrepreneurship and start-up businesses operating in technology-intensive sectors (biotechnologies, life sciences, renewable energy, artificial intelligence, information & communication technologies, software, etc.) have come to play as part of the processes of economic development and jobs creation, the access of such entrepreneurs and businesses to appropriate levels of corporate finance has become a major focus of policymakers in recent decades. Yet, this gave way to a wide variety of policy models across nation-states and even within nation-states, as levels of government and market actors adapted to those new challenges by refining or transforming pre-existing policies and institutions as well as by crafting new policy tools to address specific needs or interests. This thesis investigates the roots of such policy diversity within countries, offering in-depth accounts of the evolution of Quebec’s and Scotland’s policy strategies in the sector of development capital and sub-sector of venture capital since 1990. As compared to other regions’ or provinces’ in the United Kingdom (such as South East England) or Canada (such as Ontario), Quebec and Scottish regional venture capital ecosystems rely on a high degree of state intervention, either direct (through public investment funds) or indirect (through government-backed, hybrid or tax-advantaged funds). Hence the description of these two regions as “sponsor states,” heavily involved in the strategic backing of innovative businesses. Whereas most of the literature on venture capital has focused on economic variables to explain variations in such public sector involvement across polities however, this thesis seeks to explain policy divergence in Quebec and Scotland through a political and ideological lens. Its main argument is that the development of the venture capital ecosystems in these regions was underpinned by Québécois and Scottish nationalisms, which induced perceived imperatives and ideological preferences for policy autonomy, policy divergence, and state intervention.