Europe's ventures of no return

VENTURE CAPITAL is more difficult to extract from businesses in Europe than from their counterparts in the United States and is therefore less readily available for reinvestment, according to a new report.

The survey of 300 fast-growing companies found that more than two- thirds of investments in UK management buyouts during 1981 had not been 'harvested' at either a profit or a loss 10 years later.

In the US, in contrast, the average gap between an investment and a successful harvest via an initial public offering is about four years.

The Europe-wide research was carried out by the European Foundation for Entrepreneurship Research, the European Venture Capital Association and eight business schools, including the London Business School and Insead of France. The findings were published last week.

Matts Andersson, chairman of the European Venture Capital Association, said that the survey showed that entrepreneurs backed by venture capitalists in Europe were keen on exits. The inability of venture capitalists to harvest their investments was therefore due to a lack of suitable exit routes - in particular, effective secondary markets.

The survey also found that a third of the European entrepreneurs surveyed never sought financial advice from accountants. Banks, directors and 'investors' were preferred.