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Thisreturn,equivalentto1。

5%foreachyearofitsexistence,hasbeentherewardmetedouttoshareholdersbyNewMediaSPARK,acompanythattakesmoneyfromshareholdersandprovidesitintheformventurecapitaltoyoungcompaniesintheareasofLifeSciencesandTechnology。

AsadiversionfromtheagonyoftravellingaboardGreatWesternRailwaysIreadthisonthetrainyesterday,andIcannotsaythatitdidmuchtocheermeup。

Except,thatis,forthefactthatmyownmoneyhasnotbeeninvestedinthisotherexampleofaslowmovingvehicle。

Isentoffforthisreportinordertoproveatheoryofmine,whichisthatanycompanywithasillynameistobeavoided。

AndalthoughIadmitthatNewMediaSPARKwasnottheoriginalname–itonlybecamethisafterNewMediahadmergedwithSPARK–Idon’tconsiderthatanyexcuse。

Today,Isee,thecompanyhaschangeditsnameagain,thistimetoSPARKVentures(SPK),soIwillbeabletotestanotherofmytheories,namelytoavoidanycompanythatissoconfusedaboutitsidentitythatitfeelstheneedtowasteshareholdersmoneyonchangingit。

Orundergoinga‘re-brandingexercise’asthemarketingmensay。

AnywaybacktotheAnnualReportandforacompanythat,bythesizeofthedirectors’paypackets,clearlythinksthatitisdoingsomethingprettyvaluable,youwillnotbesurprisedtohearthatthisisalong,glossydocumentfeaturingthesmilingfacesofthegeniusesincharge。

Tannedfacesbeamfromopenneckedshirtswiththesortofselfsatisfiedexpressionsknownonlytothosewhoworkinswankyofficesandearnhugesalarieswhileappearingtodonothingmuchtoearnit。

TheAnnualReportisalsowritteninthesortofbreathless,folksy,technobabblethatwasinventedinthelate1990swhenthefutureoftheworldseemedtolieinthehandsofSiliconValleydenizenswhoknewhowtoharnessthepotentialoftheworld-wideweb。

ChairmanTomTeichmanlaunchesthereportwiththefollowingcheerleader:‘Ithasbeenaremarkableyearforus–asolidyearofachievementandbuilding。



Ifyousayso,Tom…

HethenboaststhatNewMediaSPARKhasmanagedtocashinoneofitsinvestments(or‘exit’astheprofessionalssay)fortwentytimesitsoriginalcost,aclearcaseofselectiveuseofstatisticsIshouldsay。

KeentogivetheimpressionthatluckyshareholdersareinexaltedcompanyTeichmanoozes,‘WeparticularlywelcomethearrivalinourinvestorcircleofseveralhighlyprestigiousLLP(LimitedLiabilityPartnership)investorsincludingsomeofEurope’slargestandmostrespectedinvestmentfunds。



HavingdirectedsuchencomiumattheshareholdersTeichmanthenturnshisflashingsmiletowardsthosewhorunthebusinessesintowhichNewMediaSPARKhasinvestedtheirmoney。

These,heassuresus,are‘extraordinarilysharp,seasonedanddeterminedentrepreneurs。



Withsuchacombinationofacuteinvestorsanddynamicinvesteestheconclusionisinevitable。

‘Weseetoday’sconditionsasanopportunityforNewMediaSPARKtostandinthemiddleofagreatdealflow,’and‘Wearewellplacedtobuildasoundandvaluablebusinesslongterm。



Ontheevidencesofarshareholdersinthisoutfitmusthaveanexcessofoptimism。

TheymightwishtoquestionwhytheyarepayingNewMediaSPARK’smanagementsoveryhighlyforinvestingtheirmoney–ortheirowninvestors’moneytobeprecise,toaddonemorelayerofprofessionalfeesintotheequation–andgettingsolittleinreturn。

Lapsingintocandour,TeichmanadmitsthatVentureCapitalhasunderperformedmostmajorequityinvestmentcategoriesinEuropeoverthelasttenyears,somethingheattributestothefactthatsuchfundscannotsuperchargetheirreturnsbyusingborrowedmoney。

ButifIwerehim,orforthatmatterhisfaithfulinvestorsIwouldlookabitclosertohome。

AfterallNewMediaSPARKisnowvaluedat£46mandhasnetassetsof£72m。

Butsinceinthelasttwoyears£26mhasbeenspenton‘AdministrativeExpenses’ofwhichsalariesaremuchthelargestconstituent,thevalueofNewMediaSPARK’sinvestmentportfoliohasgottoachieveanannualgrowthrateofcloseto20%justtopreventshareholders’interestsfromgoingbackwards。

Welcometotheworldofventurecapital。

Ithinkweknowwhomakesmoneyoutofthistriumphofhopeoverexperience。

Anditcertainlyisnottheoutsideshareholdersinsuchfailedbabiesofthedot-comeraasNewMediaSPARK。

ThisarticleistakenfromTomBulfordsfreedailyemailPennySleuth。

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