Trampoline featured in Growth Business article on the VC crisis

Posted on September 22nd, 2009 by Charles Armstrong

Nick Britton at Growth Business has written a thoughtful article analysing the current malaise in the venture capital industry. He quotes research that aggregate VC investment in the UK has shrunk by 63% since 2006 (from £2 billion to £750). That’s a much grimmer picture than the 30% global decline reported by Deloitte.

In the article investor Jon Moulton makes an interesting point about the destructive impact of preference shares at times like this. He observes that they make it difficult to tell how much shares are worth and create a disincentive for early-stage investors to support ventures in a down round once a VC has come in. He also suggests that the main reason VCs insist on preference shares is to protect an unnaturally high share price. I think Jon’s points are spot on. However the use of preference shares is so firmly established in the VC culture that it’s hard to see that changing.

The article features Trampoline as a case study of how established ventures are finding alternative routes to raise capital.

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