Raising finance: The blind punt is back

At last night's TechPitch4.5 event at TechHub, Old Street, there was one overriding theme: Raising finance.

This was hardly surprising. Ten early stage technology companies were pitching their hearts out to a panel of judges in the hopes of attracting some much-needed cash. They were grilled by Danvers Baillieu of Bootlaw, Moonfruit founder Wendy Tan White, Katy Turner from Eden Ventures, Growing Business editor Ian Wallis and angel Rob Wirszycz.

This was Dragons' Den meets The Apprentice. TechCrunch editor Mike Butcher played the role of a grumpy Lord Sugar, flaying one poor entrepreneur alive after he fluffed his pitch, fighting crippling nerves.

Smothered dreams aside, there were a number of interesting points made by this collection of experts from the worlds of finance, technology and media. Namely this: there is a trend gathering pace - investors are staking increasingly smaller amounts on younger firms for a higher risk.

Yesterday, we blogged about the inflated valuations of dotcom busineses - harking back to the pre-crash days, the heady heights of 1999. The rash of blind punts on unproven companies add further weight to the comparison.

Tan White cited Milner, and super angel David McClure as examples of the new trend, warning: "By investing at such an early stage, valuations are going up much higher, pricing a lot of investors out of the game before the firm has even seen any market traction."

But from the entrepreneur's point of view, it's open season - especially in the tech space. Eden Ventures' Turner said: "It's never been a more exciting time to be an early stage technology company."

But it's not all moonlight and roses. Butcher warned of a 'Millenium bubble' in the making. And Turner added:"When entrepreneurs take investment, they should look for funding partners that will stay with them all the way. There's a funding gap at the mid-stage at the moment."

In other words, the investment party is getting pakiced with flighty partners who'll dump you as soon as the business equivalent of the 'middle age spread' takes hold.

To avoid that happening, take a look at this infographic, compiled by Mark Fidelman of Seek Omega. It ranks the world's most respected venture capitalists, angels and super angels. Many of these VCs are based in Silicon Valley but, with technology shrinking the world to a cabbage patch, UK entrepreneurs should take note of these angels, both by name and by nature.

Venture Capital Infographic

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