“Venture capitalists like Crescent [are essential in] helping startups and fledgling companies”

The much vaunted Emerald Fund may have failed to deliver any actual investment here, but as The Guardian’s Henry McDonald reports, Belfast-based venture capital fund managers, Crescent Capital, are planning “another tranche of investment, worth £30m”, “by the end of this year”. And they have form in this area. From the Guardian report

One of Northern Ireland’s leading economists said that while venture capital support for indigenous companies should be “top of the wish list”, the handful of companies receiving such support in Northern Ireland compared poorly with up to 70 similar enterprises in the Irish Republic. Mike Smyth, a senior economics lecturer at the University of Ulster, called the number of venture capitalists backing local business “pathetic” compared with the Republic or Britain.

“Venture capitalists like Crescent [are essential in] helping startups and fledgling companies,” Smyth said. “But while there is so much free money from government departments like Invest Northern Ireland, demand for VC support is going to be slow. That is the main reason why there are few venture capitalist enterprises in Northern Ireland.”

Although it’s worth noting that the Crescent Capital news section includes an Irish News report on Fund III, “which Crescent fund managers claim will raise up to £60 million”, which reveals

Crescent says the pre-marketing phase to the third as yet un-named fund has already started, and its team is preparing to speak to institutional investors in America and Scandinavia, as well as Britain and Ireland, ahead of its proposed launch in early 2011.

Central to its plans will be securing a Europe-wide tender which Invest NI is launching in the spring.

Whilst of the last investment fund, Crescent Capital II in 2004, worth £22.5 million.

Investors in Crescent Capital two included Invest NI (£7.5 million), the Northern Ireland Local Government Officers’ Superannuation Committee (£6 million) and the New York State Common Retirement Fund, the second biggest pension fund in the US.

and

A spokesman for Invest NI told the Irish News: “Subject to board approval, we intend to go out to tender in the next couple of months to select fund managers for two new funds – a co-investment scheme and a development fund.

“The co-investment scheme would co-invest alongside Business Angels and seek to encourage the development of the Halo network.

“The proposed development fund will work alongside private investors to meet the gap in access to capital in the local venture capital market for investments between £450,000 and £1.5 million.”

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  • Cynic2

    I dont think its that at all

    Has there ever been a real shortage of venture capital. I am told that the shortage is in ideas / enterprises that can attract investment

  • David Kirk estimated that NI could make use of 4 times as much investment capital in start-ups than there is now from VC + Halo business angels + govt. support.

    Just go to any Mobile Monday meeting to see the range of ideas being generated.

    Or see what one of the entrepreneurs says about InvestNI at http://ebus.mgt.qub.ac.uk/wiki/index.php/Blog:News/matchmedia.tv_guest_lecture_10_Feb._2010 (#6 is his opinion of InvestNI).

  • The Raven

    Cynic, you may have a point.

    There are a lot of other wee reasons why there is a lack of entrepreneurship in Northern Ireland. Some are very esoteric and limited to this region. Some are to do with the regime in Norn Irn.

    People here don’t like putting their heads above the parapet. Some I have met have great ideas, but are almost – and I use this word because I have no other – too shy to do anything about it. Plus people here just luuuuurve to see failure.

    There are many who just never receive the encouragement. There are loads who do, who take the leap, and someone from HMRC talks to them and puts them right off.

    There are those who go to Invest NI after coming through some of the excellent local government and LEA business development programmes, and their faces just “don’t fit”. There are those who go to the bank, and face a 23 year old who’s never been from behind his desk, and who ticks a box which says accept or reject.

    There are those who want to start everything from grass-cutting to hair-dressing, and hit the wall when it comes to “but it’s not something that will make a million or employ 20 people” from business support agencies. And if we don’t encourage these types of businesses, what sort of environment do we put in place for those that *are* high rollers….?

    And then there’s the schools and colleges. Bless them. They’ll get Young Enterprise in for the day, or sign up to some enterpreneurship agenda, or tick a box by putting on a GCSE in business studies, and then give out career advice saying “be a plumber” or “this school has a great record of doctors and accountants”.

    Yer man in Dave Newman’s video is absolutely right. There are six hundred people in the INI building. I’m not really sure what a lot of them do.

    Anyway, I’ve gone a bit off-topic. From the original piece above… “Smyth said. “But while there is so much free money from government departments like Invest Northern Ireland, demand for VC support is going to be slow.”

    Actually nothing could be further from the truth. There IS a lot of money from INI – it’s just that most of it is programme-based. Or targeted at a grant to create jobs. “We’ll give you £500k towards that new building but you must create 30 new jobs”.

    Not every grant should be seen in those terms.

    Not every grant should be GIVEN in those terms.

    Not every failure or grant given which doesn’t quite meet a target, should end up on the Nolan show, for Tubby to thump his fist, demanding “for the people” what happened to this money.

    What INI, and indeed many VCs don’t realise is that many businesses hit a wall because they have a bottleneck in process, or need a new bit of equipment. That’s where the gap is.

    There’s a huge programme out there at the moment in the Rural Development Programme, which has squillions for small rural businesses to do just what I’ve said above. And then they get to deal with DARD. And that’s where it all comes apart.

    There’d be a great story in there for a journalist if any of them want to contact me at the email below.

    Yes folks, encouraging and developing an entrepreneurial culture is a difficult thing. Very few places ever get it right. We certainly don’t have the regime, or indeed the law (remember, no-one in the US is a businessman until they have had at least three failures) to foster it.

    Anyway, that’s my rant over. Sorry to go O/T.

  • daisy

    Some companies may not want to hand over a substantial share of their business to the VC hawks if they can avoid doing so. The type of firm a VC invests in is usually very high risk (with expected high returns). I think people’s appetite for high risk has probably been dampened over the past couple of years.