The problem isn't a lack of money: the BVCA says private equity and venture capital firms raised £6.6bn in new funds last year, more than twice the £3bn they raised in 2009. But it looks as though the industry has been backing more established businesses instead: the value of later-stage private-equity deals, i.e. management buyouts, jumped from £4.8bn in 2009 to £8.2bn in 2010 - which, apparently, takes it to ‘levels not seen since 2008’ (woo hoo!).
The other (rather unpatriotic) trend was towards overseas investment. According to the BVCA, UK private equity and venture capital firms invested more abroad than in the UK during 2010, injecting £20.4bn into foreign companies (that's up from £12.6bn in 2009).
No word from the BVCA on why investment in start-ups has dried up to such an extent. Maybe it's a demand issue. When the banks released their lower-than-hoped lending figures this week, their excuse was that the funds available were but the demand from businesses (particularly small ones) just wasn’t there. That's partly, busineses say, because the cost of borrowing is too high - although it's also true that it would take a brave entrepreneur to gear up and go for broke at this stage of the business cycle. Equally, some business owners might be wary of giving up equity at a time when their business prospects are so uncertain.
Well, either that – or British entrepreneurs are losing their touch when it comes to having good ideas. And we refuse to believe that...