ABSTRACT
Indirect, externally managed CVC was defined in Chapter 2 as the process by which a non-financial company invests as a limited partner in an independent venture capital fund. This fund is managed by experienced venture capitalists and can be either ‘multiinvestor’ or ‘client-based’ (Honeyman, 1992). The identification of non-financial companies as limited partners in venture capital funds is particularly significant given that fund managers are increasingly encountering problems in raising funds from institutional investors (e.g. insurance companies and pension funds). In Chapter 2, the pressures on fund managers to realise higher returns in shorter time periods were noted, along with the increasing ambivalence of institutions to investments in high risk early stage and technology-based deals. Despite record fund-raising figures for members of the BVCA in 1994 (BVCA, 1995a), the majority of these funds were raised by MBO/ MBI specialists and not classic venture capitalists making early stage technology investments.
