To be fair the industry (largely through the British Venture Capital Association, sorry the British Private Equity and Venture Capital Association as it has unwisely rebranded itself) has improved by employing classic new Labour tactics last month to leak the Walker report the day before publication and control the agenda.
But to understand its complacency you have to remind yourself that the industry has delivered enormous financial success over a lengthy, sustained period. And it did so out of the public eye, treading a fine line between making many of those within the industry extremely wealthy and arguably performing a function of government.
In the mid 1980s, Treasury officials turned a blind eye to what they recognised as inequitable tax benefits flowing venture capitalists’ way because it was an industry involved in activities they saw as beneficial, stimulating new industries and backing fledgling companies.
Nowadays it’s very different. Venture capital is now private equity and more concerned with buying into established, under-exploited businesses than trying something new.
But the industry has to go beyond Walker to ensure it continues to thrive. Dedicating a portion of its funds to the ‘ventures’ of old might be a start.
Only that way will self-regulation continue and will the industry survive an inevitable credit crunch and a further reputational backlash.
If the industry thought it had weathered the PR storm wait until restructuring funds start making enormous profits after the inevitable economic downturn.
Damian Wild is editor in chief of Accountancy Age
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