It's Time to Showcase Our Ideas; Isabell Majewsky, Director of Connect Midlands, Examines the Differing Needs and Expectations of Venture Capital Investors and the Companies They Invest In
According to figures from the British Venture Capital Association, the UK venture capital industry is the largest and most developed in Europe. It accounts for 51 per cent of total annual private equity investment and is second only to the USA in world importance.
To date, it is estimated that the UK private equity industry has invested over pounds 80 billion in around 29,500 companies since 1983. Further evidence of the size of the industry came last month, when venture capital investor Abingworth raised Europe's largest ever life sciences venture fund, worth pounds 300m. The news will be welcomed by the industry, particularly by firms at an early stage of development.
As new funds continue to be announced across the UK, access to and awareness of regular investment opportunities through showcasing events and similar initiatives for the fund managers becomes ever more crucial. Equally important however, is that once investors and innovators have been brought together, there then needs to be an alignment of expectations from both parties.
When we established Connect Midlands, we found early on that there was a misalignment between the quality of companies' proposals and the expectations of investors. Initially, many businesses lack an awareness of financing options and do not understand the expectations of investors.
Consequently, many companies are unable to shape their business proposals into attractive investment opportunities. Indeed, it is estimated that only one per cent of proposals submitted from companies receive equity invest-ment. This does not necessarily mean that the other 99% are poor but that the business case and the investment opportunity may be unclear.
We regularly see ambitious start-ups who have been striving for investment but have actually been wasting valuable resources and energy by not being what we would term as 'investment ready'.
This led us to develop a customised programme of support with companies first subjected to an "investment-readiness" check.
Essentially, it helps us to quickly identify what the fundamental issues are and whether they should really be trying to seek investment.
Ray Harris, investment director with the Birmingham office of Catapult Venture Managers explains: "There is no substitute for a well thought out business plan. …