Scanning of Prospective Investment Opportunities for a Regional Venture Capital Fund

Mole, Richard James and Mu, Jasmine Chao-wen and Al Shuaibi, Khalid (2007) Scanning of Prospective Investment Opportunities for a Regional Venture Capital Fund. [Dissertation (University of Nottingham only)] (Unpublished)

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This study's aim was to identify start up or early stage companies in the East Midlands region with potentially high growth prospects eligible for equity financing from a government backed venture capital fund (East Midlands Early Growth Fund). A proactive approach was taken for deal generation, rather than a reactive method typically adopted by conventional venture capitalists (VCs).

Initially a database of 1,004 prospective companies was generated from a variety of sources, including various business awards, or funding schemes (both grant and equity), as well as information from a number of cluster support organisations. The short list of 201 companies was developed by screening these companies by a selection of criteria, intended to highlight the most innovative companies and those looking for equity finance. One hundred and fifty eight companies were then contacted to determine/confirm their equity requirements which resulted in a 13% (20) positive response rate. Subsequently a further 8 companies were lost resulting in 12 companies remaining that were further analysed for their growth potential.

An objective assessing model primarily comprised of SWOT and Mullins' Matrix was applied to the final shortlist of companies using information from company interviews, company produced information, as well as data from independent sources. From this analysis, 6 companies were identified as being worthy of further consideration by the EMEGF, 4 of which the fund has immediately included into their investment appraisal process. Of the remaining two, one had already been introduced to the fund via another route, while the other had opted to be evaluated at a latter date.

The results of this work suggest that a proactive approach to deal generation can generate potential investment opportunities. However, the method is time consuming and may not represent a sensible use of resource. Recommendations are made as to how the proactive approach may be modified to improve the cost-benefits of this approach, by looking at companies from specific sources. The efficacy of using regional or area industrial strength data to help direct deal generation was in conclusive.

Item Type: Dissertation (University of Nottingham only)
Keywords: Venture Capital, deal generation, screening, regional development, equity investment
Depositing User: EP, Services
Date Deposited: 19 Nov 2007
Last Modified: 29 Dec 2017 10:26

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