56 min
Bonus: Venture capital indexation and how to grow the industry without increasing valuations with Richard Blakesley of Venture Cubed The EIS Navigator
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- Investing
Assessing companies for venture capital investment is often more of an art than a science. Richard Blakesley is trying to change that with Venture Cubed. Its rating system aims to objectively assess how investible new companies are. We asked him to talk about how they built their rating system, what it tells us about the venture industry and how it might change it going forward.
This is the second part of our excellent discussion. In the previous episode, we spoke about his rating system and what matters when assessing companies for investment. In this one, we discuss scaling the UK venture capital industry, indexation and investing at scale. In particular, we talk about:
the proportion of companies that should be getting investmentthe challenge of getting more investment into different companies instead of boosting valuationswhether support and investment should come from the same organisationcreating a index for venture capital and benchmarkinghow to make that index investibledata and creating systems for intermediate valuationsbuying and selling a venture capital indexdifferent investment models that might be usedwhy bigger funds would expect to outperform smaller funds
As you can see, we covered a lot of ground. This is a really important discussion for the venture capital industry: there could be an opportunity for it to scale up dramatically in the near future, but how it does that really matters. This discussion may not produce all the answers, but at least it asks the questions. And don't forget part 1!
00:45 How many companies get funding that deserve it and what's the shortfall in companies not being funded that should?
05:00 inflating valuations versus broadening the range companies getting investment - need new channels for pension funds
08:00 why the industry needs to change - case for passive management
10:00 the challenges of indexing venture capital
11:00 separating investment and support - how passive managers might arrange that
14:30 the real role of a fund manager
21:00 issue of intermediate valuation (before exit) - data collection on private countries
26:20 data protection & confidentiality
27:40 how to make index investible / expand coverage - without diluting quality
33:00 buying & selling index - fund types, physical vs derivative
35:00 creating funds where industry can write a big cheque
35:45 bigger diversified funds outperform
37:00 the power law and reversion to mean
42:00 co-investment model and role of BBB - public plus private models
45:30 favourite questions
Links
Venture Cubed website - https://www.venturecubed.com/
Richard's email: richard@venturecubed.com
British Business Bank venture capital reviews: https://www.british-business-bank.co.uk/uk-venture-capital-financial-returns-2023/
Subscribe to the EIS Navigator podcast on most services here: https://the-eis-navigator.captivate.fm/listen
Suggested books and media
Superforecasting by Philip Tetlock
a...
Assessing companies for venture capital investment is often more of an art than a science. Richard Blakesley is trying to change that with Venture Cubed. Its rating system aims to objectively assess how investible new companies are. We asked him to talk about how they built their rating system, what it tells us about the venture industry and how it might change it going forward.
This is the second part of our excellent discussion. In the previous episode, we spoke about his rating system and what matters when assessing companies for investment. In this one, we discuss scaling the UK venture capital industry, indexation and investing at scale. In particular, we talk about:
the proportion of companies that should be getting investmentthe challenge of getting more investment into different companies instead of boosting valuationswhether support and investment should come from the same organisationcreating a index for venture capital and benchmarkinghow to make that index investibledata and creating systems for intermediate valuationsbuying and selling a venture capital indexdifferent investment models that might be usedwhy bigger funds would expect to outperform smaller funds
As you can see, we covered a lot of ground. This is a really important discussion for the venture capital industry: there could be an opportunity for it to scale up dramatically in the near future, but how it does that really matters. This discussion may not produce all the answers, but at least it asks the questions. And don't forget part 1!
00:45 How many companies get funding that deserve it and what's the shortfall in companies not being funded that should?
05:00 inflating valuations versus broadening the range companies getting investment - need new channels for pension funds
08:00 why the industry needs to change - case for passive management
10:00 the challenges of indexing venture capital
11:00 separating investment and support - how passive managers might arrange that
14:30 the real role of a fund manager
21:00 issue of intermediate valuation (before exit) - data collection on private countries
26:20 data protection & confidentiality
27:40 how to make index investible / expand coverage - without diluting quality
33:00 buying & selling index - fund types, physical vs derivative
35:00 creating funds where industry can write a big cheque
35:45 bigger diversified funds outperform
37:00 the power law and reversion to mean
42:00 co-investment model and role of BBB - public plus private models
45:30 favourite questions
Links
Venture Cubed website - https://www.venturecubed.com/
Richard's email: richard@venturecubed.com
British Business Bank venture capital reviews: https://www.british-business-bank.co.uk/uk-venture-capital-financial-returns-2023/
Subscribe to the EIS Navigator podcast on most services here: https://the-eis-navigator.captivate.fm/listen
Suggested books and media
Superforecasting by Philip Tetlock
a...
56 min