November 7, 2013, by Maggie

Doing the Business 2013 – Something Ventured

On Monday this week we screened the first of this years films looking at social, ethical and environmental issues in business.  The first film was Something Ventured, a film that documented the investors that financed the development of new technologies (genetics, computer hardware and software) through the mid to late twentieth Century.  The film was an entertaining and light hearted look back at the development of venture capitalism.  The story told by many of the early and clearly very wealthy VCs from their yachts and golf club verandas.

In my view the documentary was carried by these personalities, their candid and simple view of business was illuminating, entertaining.  For those of us interested in responsibility, ethics and sustainability their commentary did become rather repetitive, lacking evidence of reflection on the broader (social, ethical, environmental) impacts of some commercial decisions.  There was no effort to suggest that VCs had any responsibility for positive social outcomes for example, early in the film Tom Perkins makes it clear he looks at the numbers at the back of a business plan first, and if they are big enough, then he will find out what the concept is.  Although later in the film he does comment on his investment in Genentec that ‘it’s great if you can make money and change the world for the better at the same time.’  Interestingly later in life, many of these now wealthy VCs are philanthropists, investing in social causes, supporting the arts or educational charities.

As I am writing this on equal pay day[1] I would also observe that the film also represented a very masculine side of business, all big risks and big rewards.  The only woman featured in the documentary, Sandy Lerner (one for the founders of Cisco) still seemed wounded by the experience of being ‘retired’ from her role in the Company when working relationships became difficult.  The male dominated world of VC investment seems to prefer a male boardroom and with few female VCs and few women founders seeking or receiving VC funding[2].

The documentary was introduced for us by Rob Carroll an Honorary Professor at Nottingham University Business School and VC based in the Midlands. Rob is a Director of Catapult Ventures and chairs Catapult’s three investment committees.  Catapult operates a number of venture capital funds totalling approximately £100m.

Quoting from the British Venture Capital Association Rob highlighted the role that VC plays in the UK.  He was careful to explain the difference between Private Equity and Venture Capital highlighting that private equity investors typically look to invest a major stake in underperforming companies that are considered to have the potential for high growth (Alliance Boots was one example) wheras VC is about investing in companies at the start-up stage, and developing new technologies.

He also outlined that VCs association with Private Equity investment can lead to misunderstandings.  He agreed that practices such as asset stripping could be seen as destructive and short term and that there were issues with investors making large returns by over leveraging businesses (most famously the Glazer takeover of Manchester United).  However he pointed out that compared to many VC and PE were relatively long-term investors, typically investing in companies for around 5-7 years and demonstrating a commitment to building lasting and sustainable value in the businesses that they invest in.

When considering the pros and cons of VC Rob Carroll left the audience with a question – did they consider that the Venture Capitalists featured in the film really created the opportunity for innovation or did they simply accelerate developments that would in time have happened anyway?

By Maggie Royston, Business Development & Centre Manager of the ICCSR, Nottingham University Business School.

 

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