chapter  2
20 Pages


At the time of the fieldwork on which this book is based, an influential UK venture capitalist, Lucius Cary,1 defined venture capital (VC) as a type of external financial capital provision, usually in equity form, which was invested in high-risk ventures (typically new companies and especially new technologies) and which offered the possibility of significant gains to compensate for the risks involved in such investments. In the UK context, this was perhaps an idealized picture to paint of venture capital activity, arguably being more influenced by perceptions of US industry characteristics than by the more conservative features of the UK industry.2 Just a few years earlier, when Nicholas Stacey (1990) had asked, ‘Should venture capitalists be more intrepid?’, he had already been drawn to the conclusion that there existed a shortage of true risk capital in the UK. He expressed the view that, overwhelmingly, venture capital investors (VCIs) expected their investees to have a sound commercial track record and a management team of proven ability. He pointed to the lack of interest in the UK in start-up and seedcorn provision, observing that most venture capitalists would only start getting seriously involved with investees at the development capital stage.3 They were observed to prefer later-stage to early-stage development, and were apparently most keen on management buyouts (MBOs). Table 2.1 identifies the main categories of venture capital involvement, and the sorts of ranges which were typical for the provision of funds in each case at the time of this study. Probably only the first three stages

(£5k-£1m.) typify true business venturing, yet it is only in the last two categories (£500k-£25m.) that most of the UK venture capital activity takes place. Thus one can be accused of using an oxymoron in applying the term ‘venture capital’ in the UK case, as the ‘venturing’ falls far short of its original connotation of ‘adventuring’.4