Book review: Angels, Dragons and Vultures, by Simon Acland

Entrepreneurs can expect to see a healthy return from buying this authoritative guide to finding capital and keeping investors sweet, says Magnus Goodlad.

by Magnus Goodlad
Last Updated: 04 Jan 2011
Venture capital has reached a low ebb in the UK at the time when the country needs it most, with activity at its lowest level in over a decade, whether that's new funds raised, investments made or venture-backed IPOs achieved.

The recent announcement by Apax of the sale of its remaining venture investment portfolio, a year after 3i completed a similar transaction, only added to the gloom. For two of the dominant UK venture investors to have voted with their feet is stark illustration that the UK venture capital industry is not in full bloom.

The publication of Angels, Dragons and Vultures, a wry and lucid guide for entrepreneurs on how to raise angel and venture capital and how to manage their business if they do, could not have come at a better time.

It is written by Simon Acland, one of the most experienced and likeable venture capital investors in the UK. After 25 years in the industry, he exchanged office for garret to write a novel set in the First Crusade, before turning his attention and pen back to venture capital. He is exceptionally well placed, having been part of the first generation of widespread venture capital investment in the UK and involved with many success stories.

Angels, Dragons and Vultures is presented as a manual for entrepreneurs considering whether to engage with the angel and venture capital communities, how best to raise capital and, having done so, what to expect thereafter - the 'your investor is for life, not just for Christmas' guide. In practice, both sides of this equation will benefit from close study and from the book becoming common currency.

On whether to engage at all, he offers cautionary advice, that external capital does not just mean additional process, the need to provide an exit in future and giving up control - it is likely to mean loss of employment as well. Simon sat on the board of 23 companies, at which only seven CEOs 'went the distance'.

His experience is borne out more widely and shows that the likes of Bill Gates and Mike Lynch, who can take a company all the way from their garage to a $1bn market capitalisation and more, are very much the exception. 'I'll be happy to hand over the reins to a new CEO' features prominently alongside 'our forecasts are conservative' in the Dictionary of Entrepreneurs' Untruths.

Much helpful advice is provided on the relative merits of angel and venture or vulture investors. Adherence will increase the probability of receiving the crucial Term Sheet and decoding the implications of complex capital structures favoured by the venture capital community: this is 'down in the detail' but it has significant implications for entrepreneurs. Angels, Dragons and Vultures is full of sensible navigation support on life after completion of a financing, including the dynamics of board meetings, investor relations and people management (including how and when to fire your co-founder).

The only sadness is that Acland's modesty and diplomatic genes prevent him from providing named war stories of what has worked well in practice - for example, a tantalising reference to SurfControl providing a 50 times' return to its investors is not fleshed out. Former Financial Times journalist Katherine Campbell was less constrained in Smarter Ventures, which includes a description of Acland's involvement in the twists and turns of the financing of Nexagent, Charlie Muirhead's sequel to Orchestream.

The Coalition has bought the argument of venture and angel-backed investment businesses and has launched a range of initiatives set out in the Blueprint for Technology, published in November, announcing plans to create a technology hub to rival Silicon Valley in the East End, followed by the creation of the Entrepreneurs Forum. The prime minister comments in the foreword: 'Companies such as Facebook, Twitter and Skype are worth billions of dollars and reached a global scale more quickly and with less capital than any business before.'

It can and does happen in the UK as well: Vodafone in the 1980s, Autonomy in the 1990s and Betfair most recently, bucking the trend with a successful IPO valuing the company at over £1bn, are all home-grown, venture-backed and entrepreneur-led businesses which have gone on to become international market leaders. Speed and capital efficiency have never been at a greater premium, with Liam Byrne's parting note helpfully summarising the extent of Government availability of capital.

Sales of Angels, Dragons and Vultures will be an important lead indicator of whether the Government's efforts will be successful in facilitating the next generation we so desperately need.

Angels, Dragons and Vultures: How to tame your investors - and not lose your company
Simon Acland
Nicholas Brealey Publishing £16.99

Magnus Goodlad is head of environmental technology at Hermes

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