PracticeConsultingComment – Rise of venture capitalism

Comment - Rise of venture capitalism

For the sixth year in a row, another investment record was set in 1999 by the UK private equity and venture capital industry, with £7.8bn going to help start up, develop and buy-out more than 1,300 companies.

The UK private equity industry continues to be the largest and most developed in Europe ? accounting for 49% of total annual European venture capital investment in 1999. Last year saw record levels of investment and record levels of investment into hi-tech companies.

Research by Initiative Europe says around half of the capital raised this year has been for venture capital funds with a technology bias. This suggests the development of a distinct venture capital sector will weather fluctuating attitudes to internet investment outside the private equity sphere.

The rush to fund innovative technology companies has attracted a raft of investors into the market, including estimates of over 100 new incubators across Europe, as well as encouraging existing players to build a technology focus into their fields of interest.

What will the firms be looking for?

  • What are the dynamics & growth prospects?
  • Is there potential for sustained growth?
  • Can management exploit this potential and control the company through growth phases?
  • Does potential financial return on the investment meet investment criteria and risk profile?
  • How can shareholders exit in medium term?

    Is your company suitable for venture capital?
    If you answer yes to these six questions, your company probably is suitable.

  • Does it have high growth prospects?
  • Is your team ambitious for rapid growth?
  • Does your company have a product/service with a competitive edge/unique selling point?
  • Do you and/or your management team have relevant industry experience?
  • Do you have a clear team leader and a team with complementary areas of expertise?
  • Are you willing to welcome a new shareholder as a future partner?

    Other e-business comment ¯
    ¯ E-business has changed all the rules
    ¯ E-business – How to get connected

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