VC guru tells Scots businesses to prepare for world technology boom

A top Silicon Valley venture capitalist has predicted that the world will experience a technology boom within 10 years that will eclipse the last internet-fuelled bubble following an unprecedented build up of investment capital.

By Julia Fields

http://www.sundayherald.com/40064

Brendan Richardson, an international deal-sourcing professional and associate director of Vision Capital, told a business audience in West Lothian last week that Scotland was well-placed to benefit from a mini-technology boom to be triggered by the much anticipated flotation of Google in the next 60 days.

The IPO of the internet search engine, which could raise as much as $4 billion, is expected to act as “a ringing bell” for VCs to jump back into the technology market with renewed enthusiasm.

It has been estimated that American VCs, having had their fingers badly burned in the bust, are sitting on $70bn worth of idle funds.

In the fourth quarter of 2003, only $4.4bn was ploughed into the US market — slightly up on the previous two quarters. Investment has returned to the much more sensible pre- internet boom levels seen in 1995-96.

Richardson, 37, also forecast that a far bigger bubble could be created within the next decade as the sheer volume of available capital grows significantly.

Richardson, who is based in California but is in charge of sourcing deals in Europe, explained: “There is much more money moving more quickly to more places in the world than ever before.

It’s becoming more standard for institutional investors like pension funds to allocate money to venture capitalists.” If you couple that, he added, with the next generation of VC managers that will inevitably forget the lessons of their predecessors then the next boom will be larger than the last.

This time around, however, the sexy technologies are expected to revolve around lifestyle products like mobile phones and video games, the unseen benefits of nanotechnology, sustainable energy and increasing the efficiency of oil extraction, and of course health care products – all areas that Scotland is focusing on.

Vision Capital is already in funding discussions with two local companies that should see deals completed within the next six to 12 months and is keeping an eye on four others. Vision Capital’s last investment in Scotland was in the Cumbernauld-based Atlantech. The telecom network management software company was acquired by Cisco Corp in May 2000 for £114 million.

He said: “Scotland should do very well. There will be more venture capital available in Europe but it will be concentrated around technology clusters.

“The Edinburgh/Glasgow corridor has one of the highest densities of world-class technologies developing anywhere.”

However, he added that politicians must start developing the corridor as a single region rather than continue to separately promote the two cities and every little town and area in between.

“It’s confusing to the outside world. I’m not sure of what level of awareness people outside of Scotland have of how close Glasgow and Edinburgh are geographically,” he said. “This turf war exacerbates the view that you are either in one area or the other.”