Description
Raising Venture Capital Finance in Europe, by Keith Arundale
Book review by Bryan Foss
As business people, we know how positive the current environment is for sustained business growth, at least where we get things right. Start-ups and entrepreneurs abound and existing companies are taking the opportunity to move into new markets at home and abroad, launch new products and services, expanding operations and hiring new staff.
Emerging small businesses are providing the innovation that large companies need. But these small businesses need to grow quickly to follow their clients’ organisation internationally and to exploit their emerging business potential. More mature private companies may need to expand into new business areas, initiate major projects or plan for the departure of previous founding directors and their capital.
Growing a winning idea, even a proven idea, into a successful and fast growing enterprise requires funds. But there are so many funding options available. Should the directors re-mortgage their houses? Can we generate enough cash from income? Should we ask the bank for a major line of credit? Can we find an appropriate business angel? Would private equity companies be too big for us and would we gain enough investment from an appearance on TV’s ‘Dragons Den’?
So many alternative sources of finance are available, but for many fast growing companies venture capital (VC) proves to be the best fit. This book clearly explains the structure of the VC industry, what it provides and the alternative financing options available. Misconceptions are directly addressed and demystified.
It becomes clear to the reader that VC companies have specialist skills in supporting technology dependant companies and this is often important as whatever business we are in we seem increasingly dependent on technology as part of our product set. Companies that I’m personally involved with have needed to develop systems to deliver their services in digital marketing, online market research, key account management and investment portfolio analytics.
The author highlights the role of marketing in building a realistic business plan that also makes the company, its products, market positioning and potential profits attractive to a potential VC investor. While we’re usually focused on selling our products to consumers, it seems that many of the same skills are valuable and central to a team that will sell the company’s capabilities and market opportunity to investors.
This book provides an outline for developing and presenting this strategic business plan, with tips on how to selectively approach VC’s, negotiating to sell or build the business, preparing for due diligence, defining the benefits for investors and planning potential exit routes too.
Insights into what VC’s are looking for will be of great value as you select and approach them. How will they value your business and its proposition? VC’s need an understanding of your development stage, industry focus, geographic coverage and the investment required. They are usually looking for a company that can achieve a leading position in a growth market, with the right balance of risk and return!
In general VC’s focus on proven technologies and aren’t keen on taking technical risk. They know how to protect your IP and shoot for global market potential. Disruptive technologies are particularly attractive to them – an oft quoted example is the digital camera that has almost completely killed film sales.
3i (one of the largest and best known VC’s) say they are always looking for:
- Exceptional leadership with entrepreneurial flair and proven technical and business expertise
- Disruptive technology and the vision to create a new market, or gain significant share in an existing market
Building an experienced and complementary management team, with sector expertise, track record and ambition is key. VC’s can help you fill the gaps, with external advisers or non-executive directors, tax, legal and other skills. They can even introduce you to relevant networking organisations and forums, finding new customers, new partners and new advisers.
The book includes a directory of VC’s focused on technology, it also provides significant advice for university spin-outs. Practical case studies and a series of ‘VC tips’ are interleaved throughout the book, with critical success factors for ‘start ups that work’, consolidated top tips abound in this clear and easy to read book.
About the Author
Keith Arundale’s 20 year involvement with the European and US Venture Capital industries shows through. If you are in business, or even thinking about starting one, this book makes an essential read. It certainly isn’t only for those ‘Raising Venture Capital Finance in Europe’.
But one final warning; recent research by City University in London suggests that, where Venture Capital becomes involved, 80% of previous CEO’s are gone within 5 years and those that remain are usually moved to in-house technology or innovation leadership roles.
About the Reviewer
Bryan Foss is an independent board level advisor, business author and non-executive director, also founder of www.FossInitiatives.comBook details
Hardback published by Kogan Page ISBN 10: 0749448490 – ISBN 13: 97807449448493 List price £45
Buy it at amazon via the New Life Book Shop - great books on business selection here.
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