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Startups suffer funding slump

17/11/06

07:16:38 pm Permalink Startups suffer funding slump

Categories: General, Blogging and Internet Culture

I got my copy of Computing today (one day late) and the main story on the cover was Startups suffer funding slump by James Brown:

According to figures from the British Venture Capital Association, investment in early-stage technology companies fell from 86m in 2004 to 84m last year.

I was thinking - no big deal, a 3% variation could be due to all kinds of unrelated stuff. Then I hit upon the following paragraph:

Innovation experts say startup firms need stronger business skills to encourage investors to regard them as less high-risk, and prevent funding for new technology firms shrinking further.

First of all - what are 'innovation experts'? I suspect they're not actually experts in producing innovation, they at least sound more like experts in business. The article goes on to discuss how early stage investment is vital for the whole UK economy, and the general tone of berating innovators for not having business skills, indirectly implying they will therefore be the downfall of the entire UK economy, continues to the end. Sorry, but this is just a crazy line of reasoning - it is naive to expect that our greatest innovators are also going to be excellent businessmen, in my experience the exact opposite is the case. But apparently venture capitalists, who presumably have a huge pile of cash because of their excellent business skills, are expecting the innovators to do all the work. Surely it's obvious that the way to build a culture of thriving innovators is not to punish them for lacking skills which are actually irrelevant to innovation itself?

There is a link at the end to another article, an interview with real, live VCs, who do seem to have their heads screwed on a bit better than Mr Brown:

European VCs are now putting in a lot more effort and have built up a greater pool of resources to help create businesses. We?re not just taking carefully placed bets in early stage businesses and watching which way they go, we?re actually helping them. I think that?s a very important part of the VC?s value-add.


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