Comments on: UK government creates £150m fund to help VCs back startups. Good for you? Or just the VCs?

By: Julian Dicks

Julian Dicks — Tue, 14 Jul 2009 15:33:47 +0000

I have to disagree with these comments, and certainly with the assertion that Fred Wilson has ‘hit the nail on the head.’ If only it were that simple. There are plenty of successful UK VCs that have backed some of the best technology to emerge from the UK (and Europe) this past decade – it is these managers with a proven track-record that can help stimulate innovation. I don’t think anyone is suggesting this fund should pour money into less successful firms. The central problem is that venture in the UK doesn’t have the levels of institutional support that exist in the US and money tends to be thinly spread. This problem increased markedly post the dotcom crash and many investors who got burnt then won’t give venture another look now. I happen to believe the UK has an excellent stable of exciting, high-growth young companies that with this cash may now be able to get to the next stage of their development and deliver outstanding returns (and hopefully coax investors back to venture).

By: alan p

alan p — Sat, 04 Jul 2009 00:46:07 +0000

There have been these sort of funds for a few years, the aim was to “bribe” VC’s into investing in the riskier early stage company by sharing the risk.

But in general they haven’t worked that well in the past, not clear why – I suspect Fred Wilson above may have hit the nail here.

By: Stuart Hibbert

Stuart Hibbert — Thu, 02 Jul 2009 14:54:33 +0000

This would have been great a few years back when VC’s were investing in startup businesses – since which the bar has been moved up and now they are ‘generally’ won’t look at businesses with say less than a million a year revenues – so if this fund is aimed truely at innovation then this won’t necessarily help those companies who are at the cutting edge of innovation who need it most.

So to answer your question, I would say this is aimed at the VC’s not the innovative companies that it is aimed at.

By: Fred Wilson

Fred Wilson — Thu, 02 Jul 2009 14:40:37 +0000

The top venture firms don’t want, don’t need, and are never going to take government money. The same is true of the top entrepreneurs.

The worst firms, on the other hand, will gladly accept government money. And that is what is going to happen with all of these government efforts to pour more money into the “innovation sector”. That money will go to bad investors and weak entrepreneurs and management teams for the most part. It’s a problem of adverse selection.

http://www.avc.com/a_vc/2009/02/a-stimulus-plan-for-venture-capital-no-thanks.html

By: anon

anon — Wed, 01 Jul 2009 13:26:57 +0000

Russ Cummings – ex SEP now Imperial Innovations
Gary le Sueur – Scottish Equity Partners

By: Henry Yates

Henry Yates — Wed, 01 Jul 2009 12:25:03 +0000

Richard Anton – Amadeus Capital Partners
Alan Bristow – ICON Corporate Finance
Mark Caroe – Eden Ventures
Rob Caroll – Catapult Venture Managers
Mike Chalfen – Advent Venture Partners
Stuart Chapman – Esprit Capital Partners
Stephen Edwards – Core Capital
Nigel Grierson – Doughty Hanson Technology Ventures
Barrie Hensby – NEL Fund Managers Limited
Bruce Macfarlane – MMC Ventures
Philip Newborough – Bridges Community Ventures
Rob Young – Accelerator Group

By: g2i

g2i — Wed, 01 Jul 2009 07:58:40 +0000

Andrew Carruthers – Spark
Anthony Clarke – BBAA/LBS
Russ Cummings – Imperial Innovations
David Hunter – NESTA
Patrick Reeve – Albion Ventures
Ernie Richardson – MTI
Simon Walker – BVCA

By: John Barrett

John Barrett — Wed, 01 Jul 2009 00:12:31 +0000

I would take what this government says with a very big pinch of salt if I were you. Gordon Brown promises a lot of things that never seem to come to fruition, especially lately, he’s saying and promising anything in a vain attempt at re-election. Usual labour thing, great ideas, but where’s the money going to come from. especially as they have now nearly bankrupt the country. They seem to think were all stupid or something. Personally, I’ll believe it when I see it.

By: @_nige

@_nige — Tue, 30 Jun 2009 18:22:08 +0000

One of the first things I noticed was that there was only one one woman’s name on that BVCA list.

By: Philipp

Philipp — Tue, 30 Jun 2009 16:12:16 +0000

There is a very similar structure in Germany – the KFW Bank can co-Invest with private investors in the ERP Startfonds, essentially getting the exact same rights and provisions as the private investors. It works quite well for early stage firms, but the high-flyer deals are usually financed completely private (even if syndicated). For earlier stages, this is of course very interesting, since Business Angels and smaller firms can stretch their funds with this method. Especially in a down economy where follow-up rounds are much harder, this gives a little leeway to investors. All in all, there can be problems of adverse selection, so the structure and set up are really important.

By: Wille

Wille — Tue, 30 Jun 2009 15:31:02 +0000

Good for the VC’s that qualify, as it effectively constitutes a subsidy to the chosen VC’s.

I do not believe in the “efficient markets” theorem one bit, but neither do I believe that the government is magically better at investing than any other market actor, especially considering it’s not their money on the line.
Why would bureaucrats with no skin in the game know what VC’s will be the best investors better than anyone else?

If they want to stimulate entrepreneurial activity and investment, incentivice it through the tax system and regulation (or lack thereof).

We’re on a slippery slope if we start believing that all money has to be ferried through the exchequer for it to be invested wisely..