Capital in Partnership with Commerce

We had an interesting shareholders meeting this morning.

The company in question is going places. Sales are up, profitability is not far off, there is plenty of capacity in the early stage team to handle growth and there is a good level of cash-at-bank following a recent Series A funding.

We discussed immediately taking in an additional tranche of venture capital to bolster our position, using current momentum and healthy reserves to gear ourselves up for a serious and sustained marketing-led expansion.

A number of shareholders – and sensible people they are - expressed doubts. Their opinion of venture funding is equivocal, mainly based on perceptions of unfair expectations regarding ownership, valuation and objectives. In my experience these are commonplace enough concerns.

Third party capital and commercial growth are not being seen in many respects to speak the same language. This is a dangerous and depressing scenario given the essential role that SME growth will play in economic recovery and future sustainability.

New mechanisms need to be put in place to free up capital and spark a newly constructive dialogue between providers and consumers of growth funds. The adversarial relationship emphasised by such investment slapstick as Dragons Den and its now numerous imitators has done, in my opinion, a grave disservice to potential investment relationships, which must become much more co-creative.

Together with a colleague I am launching a new national initiative in this area within the next fortnight. Today's experience simply underlined again how much it is needed.

- Malcolm Evans is a commentator on corporate finance and on general commercial and political issues at http://malcolmevans.org and a founding partner in an innovative organisational development consultancy.