UK VC Funding

One blog I have permanently bookmarked is TechCrunch. It's my 2009 version of 'First Tuesday'. With a touch of The Valley.

Hands up those of you who remember 'First Tuesday' then. It is an iconic reminder of all that was exciting about the Dot Com era. Entrepreneurs, VC's and wet behind the ears investment bankers turned entrepreneurs met to plan the 'next big thing'. Well according to TechCruch today, things are not quite as rosy in post credit crunch UK.

I have lifted these three following paragraphs from TechCrunch. All rights recognised etc. etc.

'You think you have it bad, Mr.-Silicon-Valley-entrepreneur-trolling-Sand-Hilll-Road-for-cash? Try life on the other side of the pond. Out of 39 firms that were active investors in British start-ups over the last five years, only thirteen venture firms have £5 million or more left in their coffers to invest, according to NESTA, the UK agency that advocates for start-ups and also sponsored the recent Traveling Geeks blogger tour.

That’s right: All but thirteen firms in the United Kingdom are either completely tapped out or have committed the rest of their funds for follow-on investments in existing portfolio companies. In total, NESTA estimates there’s about £400 million left that’s uncommitted among the thirteen, with only half of that available for brand-new series A deals. To put that into perspective, there’s roughly the same amount of money in the fund Marc Andreessen just closed than there is for new companies in the entire United Kingdom right now.

This is coinciding with a precipitous drop in UK firms closing on new funds thanks to the global credit crunch. In 2008, only seven firms closed new funds, and NESTA expects fundraising to be even weaker in 2009'.

In March last year, I was invited to attend the 2008 UK Technology, Growth & Innovation Forum in London. This was an annual meeting of entrepreneurs and VC / Angel funds. The prognosis then was not great. It has clearly become a lot worse. GBP 200 million for UK start-ups is abysmal. And according to NESTA, it might deteriorate even further.

This news contrasts with what I view as being 'green shots' in the New Zealand VC sector. (Calling it anything more than a sector amounts to exaggeration. There are so few active funds at present). The view on the street however is that three or four funds here might announce quite significant new funds through 2009.

For now though, I am digesting the news from the UK.

Ouch.