鈥淚n contrast to the prevailing view, the performance of investments made by business angels in technology-based firms indicates that technology investments do not involve a higher risk than non-technology sectors.鈥�
This is the premise of an address on Monday 25 October in London to a seminar during the Design Council鈥檚 annual Design in Business Week. It will be given by Professor Richard Harrison, Director of the Centre for Entrpreneurship at the 黑料网 jointly with Professor Colin Mason of the University of Southampton鈥檚 Department of Geography.
The academics will outline to an audience of some 100 venture capitalists, bankers, entrepreneurs, business executives and DTI policy makers how important design, innovation and technology are to ensure industrial survival and growth in today鈥檚 highly competitive global marketplace.
Professor Harrison explained: 鈥淒esign, innovation and technology play a crucial role in generating both income and wealth as well as in the creation of new knowledge intensive jobs. In fact, they are fundamental to local, national and international economic development.
鈥淭he bottom line is that businesses of all sizes have to work smarter and become more 鈥渘imble.鈥�
Professor Mason went on to explain the financial challenges currently facing many technology-based businesses. 鈥淭here is quite simply a feeling out there that such businesses are just too high risk an investment.
鈥淭he consequence is that these businesses, particularly start-ups, experience greater difficulty in raising the finance they need for development. In turn, that reduces the contribution they can make to the transformation of the economy.鈥�
Information provided by 127 business angels on the performance of their investments has enabled Professors Richardson and Mason to debunk this widely held 鈥渢oo risky鈥� myth.
* There is a penalty attached to the 鈥渘ewness鈥� of any start-up company 鈥� this is no more severe for technology based businesses than in other sectors
* Many Business Angel investors bring with them a familiarity with technology businesses: this can allow them to assess companies more accurately which makes them a more appropriate potential funding source than bank or institutional venture capital providers
* Investments in technology-based companies tend to be bigger than average for other types of businesses: companies starting with more finance are less constrained by cash-flow shortage, allowing them to become bigger, better businesses
* Such companies are more likely to attract co-investors: not only does this spread the risk but leads to more funding being available for the company at start-up phase
* Evidence shows that the survival rate of high technology firms is higher than that for the small business sector as a whole, demonstrating that the risks of investing in technology-based firms have been overstated