Advantage Business Angels' managing director Neil Mackay continues to look at the requirements of innovation.
Last week I finished with the idea that measurement is fundamental to the process of innovation and that one of the casualties of the high level of "spin" that seems to permeate our culture is a lack of impartial measurement.
If we don't measure things impartially how can we identify genuine progress?
The National Health Service is one body trying to change and improve itself. There is now a bucket load of statistics, performance targets and improvement programmes. Education is in a similar position but here the focus is all about exam results. In both these cases the measurement systems give positive news. But what is your experience of the service you or your kids actually get? How do employers feel about the quality and relevance of the education system?
We have an example nearer to home.
As I have commented many times before in this column, the big venture capital houses like 3i have all but left the market for financing deals in early stage businesses under £2 million (now probably heading towards deals under £10 million). This has left a big gap in the market which is being filled by growth in business angel investors and growth in the involvement of the public sector.
Interestingly the public sector involvement in the UK is more and more a partnership approach where public money will only go in if private money leads the way. The USA has been the pioneer in this approach - investing billions of dollars of public funds in early stage business opportunities. Things are less clear on the Continent but reports from EBAN (European Business Angels Network) show significant public sector money going into early stage business via the business angel market, especially in Spain, France, Germany and Sweden.
As usual with statistics it is difficult to get a true comparison because the way the activities are measured differs and is difficult to put down. Broadly there are two dimensions to measure: how effective is the public investment and how much does it cost to administer.
I want to look at effectiveness in a later article but for today let's go with getting new ideas financed and developed with an acceptable number becoming major profitable companies. In other words investment has to produce enough winners - there are no prizes for just taking part.
Cost of administration is easier to measure, you would think, but still represents quite a challenge and again I want to look at this in a later article.
So for today let's think of it in two parts: first the cost of the control system to make sure public funds are being used as intended; second, the cost of delivery principally marketing to customers who in this case are early stage businesses.
Based on this who is the most effective for the cost of administration: USA, UK or Europeans?
From my straw poll, which is entirely statistically invalid and based on conversations with people in the early stage market in UK and abroad, I'd say that USA has been the most effective, UK second and Europe third.
Next week I'll tease this out and look at some of the data available to try and bring a more measurement-based view on this question.