Will investment dry up?
Feb 12 2009 by Andrew Mernin, The Journal
EXPERTS have sounded a note of caution to investment-hungry science and technology start-ups in the region despite new figures revealing soaring levels of venture capital spend in the sector.
Figures published this week by consultancy Ascendent showed that venture capital investment into British and Irish technology firms last year reached £1bn – a 15% rise on the previous year and the highest level since the end of the dotcom boom in 2001.
However, while industry leaders in the region remain relatively bullish about the ongoing availability of venture capital funding, some have warned of changing market conditions for fledgling firms.
As the downturn blights almost every sector and causes sources of investment to dry up, science and technology appear to be weathering the storm and the level of venture capital activity remains high.
Marion Bernard, chief executive of NorthStar Equity Investors in Newcastle, said the investment house is actively seeking young firms to back.
She said: “Under the current economic conditions, there are more opportunities to invest in disruptive technology.
“People are looking to back good ideas which will increase in value in the long term and, for technology companies, equity investment is appropriate when they are looking to build value in a new technology.
“Venture capital is about long-term investment so technology is a stable investment for venture capitalists.”
This year would seem like a bad time to consider setting up a new science or technology business. But Professor Brian Tanner of the North East Centre for Scientific Enterprise believes this could be the optimum time for tech-minded entrepreneurs to create their own empire.
He said: “The moment to invest in technology and innovative processes is in a recession. Google, Microsoft and Fedex all came out of a recession.
“The answer of why technology is doing better than other sectors, is that people recognise that financial services are never going to be the same again. And if we are going to have a manufacturing industry in the UK it’s going to have to be at the hi-tech end of the industry.
“I’m positive about the continuing availability of venture capital funding.”
