The state of venture capital in the UK

Access to Series A funding is now better than ever according to leading venture partners and investors…

The availability of Series A funding in the UK is a contested subject and one which four leading venture partners were keen to address.

They share their views on the state of British venture capital and offer tips on how to attract investors…

 

The debate

How is the Series A market changing?

Stefan Glaenzer, founding partner of Passion Capital:

“Criticisms about Series A funding are bull****, we are seeing more start-ups getting funding and early-stage backing – there has been a 1.8% increase in Series A funding.”

Laurence Garrett, partner at Highland Capital:

“The landscape has changed but there is a lot out there for the Series A, in the UK we’ve got £10m invested through Series A and at least a 50% growth rate.”

Bill Earner, managing partner at Connect Ventures:

“Access to Series A in the UK is good, perhaps not for later-stage as there’s only a handful of UK funds and firms that invest in later-stage series funding.”

“It comes down to the fact that companies either grow or perish. The funding situation in Europe is as good as it has been since 2008.”

Nic Brisbourne, director and managing partner of Forward Investment Partners:

“Things are definitely improving but that said the venture market is still far below that of the US – the US is better than us when it comes to Series A.”

“But we are in the best position we’ve been in in many years. There are some structural challenges that we need to tackle – namely we need to find new ways of getting capital into the venture community. Government and institutions also need to work more closely together.”

Stefan Glaenzer:

“As Laurence said the landscape has changed dramatically. Nowadays it’s possible for businesses to raise major finance without using venture funds. For example Rocket in Berlin raised £1.5m through their own network – there are other ways.”

Laurence Garrett:

“The cost of starting a business has gone down so much now and the number of start-ups has grown too. Let’s be clear, US performance hasn’t been great – take away Silicon Valley and what else is there in the US? The number of VCs in the US is much lower than the UK.”

What do you look for in businesses seeking investment?

Laurence Garrett:

“For us, we look for performance and demonstration of monetisation.”

Stefan Glaenzer:

“Investors are supporters in a sense, we’re all ‘lemmings’. It’s really all down to you – you’re the one that can attract investors.”

If a business has a lot of shareholders would this put you off investing in them?

Laurence Garrett:

“No to put it bluntly. A lot of what we do is to hold liquidity events and not having shareholders does make it easier but it doesn’t affect investment potential.

“VCs don’t say ‘I’ve got a great deal’ because of the terms.”

Stefan Glaenzer:

“I would never invest in someone that has given away more than 25% of their business because by that evidence the person is not an entrepreneur.”

If a business can raise finance without using a VC or venture fund should they?

Laurence Garrett:

“Yes! If you don’t need to use a VC then don’t!”

Stefan Glaenzer:

“It’s easier to divorce your wife then it is to get rid of an investor so if you can raise finance without then do it.”

Tips for a successful pitch?

Laurence Garrett:

“Your pitch should demonstrate your potential as well as what you have already achieved in 20 slides or less. Make sure you use images so that it’s not too content heavy, demonstrate clear KPIs and present clear goals for the future. Ensure you have a concise elevator pitch too.”

 

Stefan Glaenzer, Laurence Garrett, Bill Earner, and Nic Brisbourne were speaking at Vator Splash London this month, held at Level39, Europe’s largest Fintech accelerator.

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