A quarter of venture capital investments made in 1996 underperformed as investors paid over the odds for businesses, experts said this week.
Graham Turton, Price Waterhouse’s business regeneration partner, said the sector faced a 1980s-style series of high-profile failures, unless the matter was addressed urgently.
Turton, who prepared a report for the European venture capital industry, looked at 30 venture capitalists in 13 European countries.
It found that 25% of all investments in 1996 either failed or under-performed, at a cost to European business of ecu518m (#347m).
But despite the high failure rate, the venture capital market continued to boom. The UK venture capital market is the largest in Europe and worth #520m, according to figures compiled by Coopers & Lybrand.
PW’s Turton attacked venture capitalists for paying vastly inflated prices for businesses. ‘Venture capitalists have to pay more attention to their clients’ business needs. There is a lot of money chasing fewer deals,’ said Turton.
But Clive Sherling, chairman of the British Venture Capital Association (BVCA), defended the UK venture capital market.
‘In the UK over the last few years, the venture capital market has delivered a 20% to 30% return to investors. This is just an accountant telling us how to understand industry.’ He added that the only way to maintain high returns is to take risks in the market.
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Deloitte's north-west Europe foray; BDO, Smith & Williamson investment paths; Shelley Stock Hutter; and Wilkins Kennedy discussed by editor Kevin Reed on our Friday Afternoon Live broadcast
Accountants should alter their perspective on auto-enrolment to maximise business opportunities, according to Eric Clapton.
Kevin Reed discusses whether new accountancy group Cogital can rival the Big Four...and its likely direction of travel