Thursday, 26 November 2009

VCs: Where has the “venture” gone from Venture Capital?

Well here is a question that no one seems able or willing to answer, I’ll throw it open to the investment Universe -VCs, private equity, corporate finance, angel funders, high net worth individuals – be you early stage, late stage (or indeed ANY stage which would be good right now)

Who is REALLY investing over here in the UK – have we closed for Christmas early this year?

From where I am sitting (having watched a colleague bash the phones for the last 4 weeks across a myriad of investor networks on what is – to me – a “no brainer” cleantech medical device manufacturing process) it strikes me that there is an inordinate amount of tyre kicking going on out there, people sitting on piles of cash with no home and not a lot of action.

Today we hear of an investor pulling the plug on a £7m investment because they were feeling “over exposed”.

And at the other end of the spectrum on my desk I can’t find £150K for something that has mass market developing country and remote energy application potential.

Come on people, shame on you! Do I really have to create something totally radical to bypass you lot?

If the anti risk and tyre kicking stance most of you are taking presently continues, how do we progress the low carbon technology agenda? The Carbon Trust and those delightful public sector competition rounds are not going to get us anywhere fast.

My sweeping generalisation about investment land presently is that you are all lacking in creativity, sophistication, knowledge and your models and ideals means you will miss some technology waves. Some spaces are moving so fast by the time you’ve even “gated” the first investment proposal the opportunity has been snapped up into corporate land, is mothballed never to see the light of day, or worse – goes bust before it's started.

The lack of funding supply also means that there is a world of collaboration starting to open up out there that will completely bypass you in future. All those lovely technologies that are scalable and interesting may well find themselves swept up into the arms of a cash rich Corporate doing a nice line in acquiring patents and technologies and sand-bagging for the future. Again, some of those may never see the light of day because we all know corporate cultures aren’t great at “incubating”.

Anyone notice a bit of sweeping up of patents going on of late?

Push back by all means …

By Debby Lloyd
Managing Director, EcoSearch


  1. Debby, Debby...shame on you, how can you say that the VC’s are lacking creativity - I would challenge you on that, they’ve never had creativity.

    We all seem to have this idealistic view of a VC as being a dynamic set of creative entrepreneurs who make judgements based on skill, forethought and a “gut feel”, well I’m sorry to burst your bubble but VC’s, well the ones that I have met are accountants, mathematicians, and spreadsheet geeks who work on NPV, IRR and other unfathomable mathematic equations that only someone with a large brain and a very small personality can work out – the other sorts of VC that I have come across have a small brain and no personality! These chaps follow the “sheep” mentality of investing.

    This is not bash VC day – far from it, VC’s have to work on calculating risk and make decisions based on what they have in portfolio right now. I’m guessing that anything that they took a punt on two years ago is now having a tough time and not giving them the returns they expected, show me a business in renewable energy and cleantech that is doing as well as Twitter and I’ll show you a queue of VC’s (Baaaaa)

    “VC” for the time being has to be “EC” (expansion capital), safe, commercialised businesses that are going to give a steady but almost guaranteed return. So I’d say live with this fact at least for the medium term.

    I agree that there is a lot of cool technology that is withering on the vine, but the difference between VC’s and inventors is that they are entrepreneurs, they take risk, are by nature resourceful and are trailblazers – they will succeed and they don’t mind where they get the cash!

    VC’s are licking their wounds right now, but big corporates who have ridden the growth wave for ten years and not invested in R&D are in need of something new to keep ahead of the competition – they might not be best at nurturing new things but who cares if it gets the project to market.

  2. Mmmm...
    I have to agree VCs are kind of retreating on the wave of risk aversion that characterises our recent times but I would like to think it is just temporary...
    Have you checked Holden and Partners?
    If their last seminar at The Hub was not all just hot air, VCs are still part of the solution - though I have to say it permeated they are being quite a lot more cautious you would expect VCs to be...