WHAT INNOVATION MEANS TO VENTURE CAPITAL

WHAT INNOVATION MEANS TO VENTURE CAPITAL 

 

After 20 years in the venture capital industry I can confidently confirm what King Solomon writes in the Book of Ecclesiastes: "There is nothing new under the sun."

Certainly this statement is true in respect of human conduct. Sometimes I think it is true in relation to technology and I certainly think it is true to say that overall inventors fail to understand the world in which we live where simply to have a better product does not guarantee market success.

It is also very sobering to realise that many technologies, while representing a significant improvement over their predecessors, have nevertheless taken a generation to gain broad market acceptance. It is hard to appreciate that sometimes the product diffusion cycle can be 30 years.

In addition, in some industries such as medical innovation, there are very substantial legislative barriers to entry, apart from the usual market considerations. In short, it requires an appreciation of the realities of our world and the substantial imperfections that exist within the various markets that create obstacles beyond the appreciation of an inventor who can usually only see the technical merit in an innovation.

The skill of a venture capitalist is in understanding the technical excellence of any proposal while at the same time being able to both discern market obstacles and potentially also to provide solutions. Thus a competent venture capitalist provides far more than money as they can be the essential ingredient in the commercialisation of an innovation.

Vanda Gould, chairman,
CVC Ltd

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