# The VC opportunity: breaking down barriers for private investors 
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-12-28
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Why British Venture Capital Deal Volumes Hit Record Low in 2021
Meta Description: Understand the latest trends in British venture capital investing, from lower deal volumes to the flight to quality approach, and the barriers preventing
URL: https://financedigest.com/the-vc-opportunity-breaking-down-barriers-for-private-investorshtml

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_By_ **_Jonny Blausten,_** _CEO and co-founder of Sprout_

KPMG’s latest report revealed that British venture capital deal volumes are at their lowest rate since 2016. But what does this actually mean?

At face value, this drop may be perceived as a problem – the reality is more nuanced and reflects a more considered, disciplined [approach to investing](https://www.financedigest.com/investment-research-under-mifid-ii-a-more-meaningful-approach-to-evaluation.html "Investment research under MiFID II –a more meaningful approach to evaluation") that is emerging.

As in many other asset classes, the broader macroeconomic conditions have prompted a ‘flight to quality’ – [investors are more focused on identifying the best assets to invest](https://www.financedigest.com/why-are-investors-checking-out-of-uk-buy-to-let-and-checking-in-to-hotel-investment.html "WHY ARE INVESTORS CHECKING OUT OF UK BUY-TO-LET AND CHECKING IN TO HOTEL INVESTMENT?") in, and are increasingly learning from mistakes of recent years.

Venture capital [remains a lucrative option for private investors](https://www.financedigest.com/6-months-to-go-until-brexit-and-investor-sentiment-remains-bold.html "6 months to go until Brexit and investor sentiment remains bold") if past performance is anything to go by – as one of the highest performing asset classes of the last 15-20 years (via Pitchbook) – yet accessibility issues remain.

The high minimum investment requirements prove a barrier between eligible private [investors and high-performing VC funds](https://www.financedigest.com/uk-investors-add-1-2-billion-to-equity-funds-in-march-calastone.html "UK investors add .2 billion to equity funds in March – Calastone"), preventing individuals from diversifying their investment portfolios, and VCs from accessing an untapped pool of capital.

[It’s time](https://www.financedigest.com/why-its-time-to-adapt-to-the-virtual-world-how-to-master-online-negotiations.html "Why it’s time to adapt to the virtual world: how to master online negotiations") for this to change.

**The** [latest VC trends](https://www.financedigest.com/e-commerce-report-the-latest-trends-and-forecasts.html "e-Commerce Report: The latest trends and forecasts")

The drop in deal volumes is representative of the increasingly high bar VC [funds require to make an investment](https://www.financedigest.com/norway-wealth-fund-to-consider-investing-in-unlisted-equities.html "Norway wealth fund to consider investing in unlisted equities"). Indeed, the era of loss-making [businesses receiving VC funding](https://www.financedigest.com/funding-options-bids-for-backing-to-help-small-businesses-take-control-of-their-finances.html "Funding Options bids for backing to help small businesses take control of their finances") in perpetuity is over. Investors are focusing on companies which demonstrate more proven fundamentals (clearer paths to revenue and profitability), whilst still searching for the material upside that [start-ups offer to early investors](https://www.financedigest.com/5-ways-that-start-ups-can-attract-investors.html "5 Ways That Start-Ups Can Attract Investors").

Fundamentally strong and innovative [businesses are top](https://www.financedigest.com/a-female-founders-top-tips-for-success-for-women-in-business.html "A female founder’s top tips for success for women in business") priority for VC funds. Whilst many are adopting a ‘sit and wait’ approach, household names such as Uber, AirBnB and PureGym were founded and funded in the last recession; [investors who find today’s equivalent of these will benefit as VC funds identify the startups](https://www.financedigest.com/virgin-orbit-says-space-startup-in-talks-with-potential-investors.html "Virgin Orbit says space startup in talks with potential investors") at the forefront of the next wave of innovation.

**I couldn’t invest even if I wanted to…**

Whilst understanding the benefits of [investing in private](https://www.financedigest.com/procurementin-european-private-equity-investment-adding-value-to-the-boardroom.html "Procurement in European private equity investment – adding value to the boardroom.") companies, many errantly turn to angel investing. Despite best intentions and the merits that investing in private companies can bring, private investors [must ask](https://www.financedigest.com/10-questions-cfos-must-ask-themselves-about-privacy.html "10 questions CFOs must ask themselves about privacy") themselves whether they have the ability to identify and access the best possible opportunities. Indeed, VC funds are [exclusively focused on sourcing](https://www.financedigest.com/exclusive-foxconn-woes-could-hit-at-least-30-of-iphone-nov-shipments-from-china-plant-source.html "Exclusive: Foxconn woes could hit at least 30% of iPhone Nov shipments from China plant – source") and executing the best possible deals.

For many private [investors who seek](https://www.financedigest.com/ges-investors-seek-solutions-to-renewable-energy-supply-chain-challenges.html "GE’s investors seek solutions to renewable energy, supply chain challenges") to add VC funds to their investment portfolio, the entry ticket is still far too high.

From an eligibility perspective, individuals [must qualify as Professional Investors](https://www.financedigest.com/brexit-why-investors-must-now-think-global-to-maximise-and-protect-wealth.html "BREXIT: WHY INVESTORS MUST NOW ‘THINK GLOBAL’ TO MAXIMISE AND PROTECT WEALTH"), High Net Worth Individuals (e.g. earning over a certain threshold – usually £100k, or have assets outside their primary residence above £250k), or Sophisticated Investors (e.g. [working in finance](https://www.financedigest.com/finance-teams-have-been-left-in-the-dark-on-the-real-cost-of-working-from-home.html "Finance teams have been left in the dark on the real cost of working from home") and be actively investing in some capacity). However, many top funds have their own minimum requirements (usually for admin reasons) in excess of £1m+, and in many cases over £10m+. This means that many investors who are eligible to invest in VC are still [unable to access the best funds](https://www.financedigest.com/55-of-uk-smes-unable-to-access-all-funding-needed-to-grow.html "55% of UK SMEs unable to access all funding needed to grow").

Frustratingly for this group of investors, VC funds have long been recognised as one of the [top performing asset classes; top quartile funds have returned more than 35% annually for over a decade (via Pitchbook)](https://www.financedigest.com/leicester-top-of-the-class-for-student-property.html "Leicester top of the class for student property").

As a result, some ambitious [investors seek out unproven high risk](https://www.financedigest.com/institutional-investors-back-shell-board-lawsuit-over-climate-risk.html "Institutional investors back Shell board lawsuit over climate risk"), experimental assets such as cryptocurrency. These are often highly volatile, for obvious reasons. Investors shouldn’t need to explore unproven asset classes; they deserve [fair access](https://www.financedigest.com/supporting-a-fair-and-resilient-society-by-protecting-access-to-cash.html "Supporting a fair and resilient society by protecting access to cash ") to previously unreachable, high performing asset classes like venture capital.

**[Changing the face](https://www.financedigest.com/the-changing-face-of-peer-to-peer.html "THE CHANGING FACE OF PEER-TO-PEER") of venture capital**

There’s much to be gained by [providing greater access](https://www.financedigest.com/patsnap-partners-with-wipo-to-provide-developing-countries-with-access-to-rd-analytics.html "PatSnap partners with WIPO to provide developing countries with access to R&D analytics") to VC.

Aside from accessing one of the [top performing asset classes](https://www.financedigest.com/camradata-announces-top-asset-class-searches-for-investors-in-march-2018.html "CAMRADATA announces top asset class searches for investors in March 2018"), private investors can diversify their portfolios. Traditional asset classes, such as pensions and ISAs, are inherently linked to the stock market; a public market decline will result in many private [investors nursing losses](https://www.financedigest.com/investors-flee-uk-bonds-pushing-gilts-to-huge-monthly-loss.html "Investors flee UK bonds, pushing gilts to huge monthly loss") for years. Extending their investments into private [markets with VC funds](https://www.financedigest.com/market-turmoil-a-boon-for-trend-following-hedge-funds.html "Market turmoil a boon for trend-following hedge funds") would leave investors with healthier, diversified portfolios.

For the VC funds, facilitating access offers a [greater pool of capital from ambitious and enthusiastic private investors](https://www.financedigest.com/stocks-with-greater-socially-responsible-investor-demand-saw-weaker-losses-during-the-covid-19-crash.html "Stocks with greater socially responsible investor demand saw weaker losses during the COVID-19 crash"), also providing a wealth of relevant industry knowledge.

By unlocking access to VC funds Sprout is levelling the [playing field](https://www.financedigest.com/using-agility-to-resist-economic-instability-and-level-the-playing-field.html "Using agility to resist economic instability and level the playing field") and helping investors in the process.


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