Do UK venture capitalists still have a bias against investment in new technology firms

Abstract

The growing economic and political importance of the 'New Economy' throughout 1990s has added greater saliency to both supply and demand sides, policy oriented questions about the availability of venture capital as a catalyst for new or 'high' technology-based, early-stage investments. This paper analyses the changing attitudes of UK venture capital firms to investment in technology enterprises. A 1999 survey of 60 UK venture capital firms was structured to be directly comparable to a 1991 study. The main findings demonstrate the increasing importance of technology investments to VC firms, particularly 'generalists'. Accordingly, the adoption of collaborative strategies to access intellectual capital and complimentary resources via inter-firm networks is particularly important. The authors conclude that despite material improvements a bias is likely to remain against VC firms' involvement in the earliest (seed and start-up) stages of the technology investment cycle.