Venturing a peek inside world of capital funding: Alison Eadie looks at a book that goes behind the scenes of a deal maker

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The Independent Online
YOU'VE seen the movie, now read the book.

The Adventurers: A Year in the Life of a Venture Capital House by Anthea Masey is based on the BBC series broadcast in the spring, which charted the day- to-day business of Grosvenor Venture Managers.

Robert Drummond, chief executive of Grosvenor and chairman of the British Venture Capital Association in 1992/93, allowed the BBC cameras to follow the innermost workings of his company and expose its successes and failures.

The book, published by the BBC, follows a number of deals - only some of which are completed - and details the often tortuous processes leading up to an investment decision.

Prospective investments range across industries, including biotechnology, blanket manufacturing and package holidays. The story is told from the viewpoint of both the venture capitalist and the entrepreneur seeking funds.

It becomes clear that often the two have a healthy respect for each other, even when a deal fails to gel. Grosvenor decides against making a further investment in Pharmaceutical Proteins, for example, but PPL's managing director, Ron James, accepts the reasons and admires Grosvenor's negotiating skills.

But Mr James, as a former venture capitalist with Prudential Venture Managers, may have been more sympathetic than some. Grant Bovey, whose company Watershed Pictures produces videos for sale and who succeeds in raising pounds 500,000 from Grosvenor, has a few words of warning.

Mr Bovey finds the process of obtaining venture capital extremely time-consuming and expensive. Small businesses risk neglecting the business while chasing funds, he says. Raising the money costs Watershed pounds 81,000 - 16 per cent of the money raised - in fees to merchant bankers, auditors, lawyers and for Grosvenor's legal expenses.

As well as organising deals, Grosvenor attempts to raise finance, and the book illustrates the difficulty of persuading institutions to part with money in an inhospitable climate. The company eventually has to limit its ambitions.

Many in the venture capital community thought Mr Drummond was mad to allow the cameras access to his firm. He wanted to raise the profile of Grosvenor, particularly as it was fund raising.

The result of his candour is a useful insight into venture capitalism. The case studies should be of help to entrepreneurs seeking funds.

(Photograph omitted)

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