Jiva Technology

Venture Capital: what does it mean to me?

The finance industry is a funny thing. A Schrodingers cat type of industry that is simultaneously seen as both villain and prestigious place to work. I put that down to the fact that there’s no such thing as the finance industry¬†in the way that there is an aerospace industry or a pharmaceutical industry; just many different loosely connected activities that are brought together under the same roof.

Perhaps the image of an industry is unimportant, but you increasingly hear questions about the role of finance in our society, the financialisation of industries and whether or not finance is a good thing. In the UK, there are loud voices that proclaim we have “too much finance”. There’s the threat of action and when that happens, there’s always the possibility of the baby being thrown out with the bath water.

The venture capital industry is a single segment of the global finance industry, but it bears little resemblance to retail banking, re-insurance or hedge funds. Beginning in Boston in the 1940s, venture capital has become and enormous industry that invested over $170bn in 2017. It backs companies around the world in everything from immunotherapy to green tech and provide the oxygen for startup economies from London to LA and Bangkok to Berlin.

Its easy to forget that the fashionable status of working in a startup is a relatively recent thing. It wasn’t that long ago that established ‘blue chip’ organisations were the preferred home of the best and brightest. Thats no longer the case. Working ‘in a startup’ is a socially acceptable, even desirable thing to do without any reference to what the startup actually does. Cities are rated according to the vibrancy of the ‘startup scene’. A new report sheds some light on how certain cities have become global hubs for venture capital deals and its no coincidence that these cities have been the economic winners of the last twenty years. Over half of VC investment goes to just six cities worldwide: San Francisco, New York, London, Beijing, Los Angeles and Boston. Some cities not traditionally associated with the technology industry, like Bangkok, have seen investment grow dramatically.

The energy and momentum being generated by the startup/venture capital combination is quite breathtaking, but with it comes the responsibility to understand the dynamics of whats going on. Its not enough to simply celebrate the winners; it becomes imperative to support the success of these global hubs whilst helping to share the benefits more widely. It would be a shame if the purpose, global reach and growth provided by the startup/vc ecosystem descended into a battle between perceived winners and losers. There’s an opportunity for this relatively recent and unique phenomenon to help us all, but it perhaps requires a more nuanced approach from all parties.





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