Neil MacDougall’s reflections after a year in the chair

I was recently asked if I would do it again. My answer was “No, but somebody needs to.” When the BVCA was set up in the early 1980s, venture capital funds were a relatively new idea that nearly nobody had heard of and leveraged buyouts financed by private equity firms were only just starting to happen. Roll the clock forward nearly 40 years and it is a very different story. That story is neatly summarised by my former employer, Bain & Company, whose report for 2021 shows a global dry powder figure across all private capital investment strategies of a staggering $2.9 trillion.

Even allowing for the fact that the capital allocated to the UK is probably only a single-digit percentage of that $2.9 trillion (UK GDP is 2.5% of global GDP), the figure is still immense. Then factor in that the BVCA members’ portfolio companies directly employ nearly 1 million people in the UK (around 4.5% of the private sector workforce) across over 4,000 companies and you quickly realise there needs to be representation for those investing private capital.

There are many obvious reasons for the need to be represented by the BVCA, but the essence of this representation is our collective, convening power. Together we can better demonstrate and explain, both publicly and privately, all the incredibly inspiring and positive contributions private capital provides businesses in this country. The 41 case studies in New Horizons [link] are great examples of this and an antidote to the venom with which certain parts of the press have chosen to attack private equity in particular.

Venture capital benefitted from the intense work we did in cooperation with the government to get the Future Fund up and running and designed in a way that should protect the public in the context of early-stage investing. However, there is commercial risk involved and there will be failures and losses. We will need to remind stakeholders that the winners pay for the losers. While much has changed over 30 years this particular aspect of portfolio theory remains valid and it is also why experienced general partners are still essential to the sector.

The future is ours to shape….

Neil MacDougall
BVCA Chair 2020/21, and Chairman, Silverfleet Capital