Early Stage investing in the UK: Doom and Gloom?

I attended the CityZone event Thursday night to hear Jon
Moulton’s Christmas message of doom and gloom for the early stage venture
capital community. Jon’s view is that there is too much money in early stage investments
in the UK- hence the poor historical returns seen by early stage investors.

Mark White from NESTA added his comments that the UK early
stage venture market is too stratified and there needs to be vertical
integration- allowing companies to receive funds from seed through to Series D
from the same Fund. Many early stage investors have caps on their investment
amounts (London Seed Capital included) to keep us investing in the sub-£1m

I agree with parts of both of what they said. I’m a firm believer that in order
to make money in VC you have to invest early and then really back the
winners that begin to emerge. Unfortunately, that’s not the prevailing approach in the UK.

The “stratification” Mark refers to strips early stage
investors of the ability to follow an investment with large sums of money in
later rounds. This means spinout funds and early growth funds, like LSC, are
taking large risks initially without the ability to put “good money after good
money” for successful investments. In most cases, other funds are investing
large subsequent sums into these companies – at a point of significantly
reduced risk with marginal price increases on the last round (if they don’t
make it a down round)- and are reaping the rewards.

Jon further qualified his comment by saying that the startup money is spread too thinly, i.e. too many startups are getting funding. The key here is that the funding is insufficient. Case in point: one of our portfolio companies is doing very well, but we can’t provide additional capital to them.

I  don’t share Jon’s prognosis of doom and gloom, but I do agree that there’s a lot of work to be done improving the venture capital market in the UK.

Podcast overkill?

I have to admit to being a Vodcast junkie, but podcasts haven’t won me over at all. Case in point is VentureWeek. Excellent concept and all-star participants, but really, even with a tube commute how can I dedicate ONE HOUR listening to the podcast?

I participated in the VC Show during the summer and I would never listen to myself for 40-odd minutes. It was a fun experiment and hopefully somewhere in my rambling there was an ounce of interesting content.

Which brings me to my point: We can read several times faster than we can listen- which is one reason I found audiobooks, and now podcasts, to be infuriating. I’m always thinking “Get to the point already!”. Is anyone else under-whelmed by podcasts or have I been getting the wrong ones? (or is it Attention Deficit Disorder?)

5G vs 1G iPod

1gvs5g_1 I’ve uploaded a few pictures to Flickr comparing my old iPod with the new 5G video iPod. Amazing what a few years can do for a product.

It’s great that Apple has returned to the same look as the original iPods. I can’t say that I miss the mechanical scroll wheel – the reason I bought a mini iPod orginally was the form factor- I think the click wheel is a really elegant implementation. Plus, I really hated the 3G iPods with the buttons above the wheel.