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Ian Connatty, Managing Director of British Patient Capital, comments on the outlook for VC in 2021

“Like many things in 2020, the venture capital industry has continued to move forward, despite adversity,” says Ian Connatty, Managing Director of British Patient Capital. “And the challenges 2020 has brought, such as the difficulty of undertaking due diligence on prospective investments, will continue to impact the sector in early 2021, as will a Covid vaccine. How will the trends we have experienced this year influence the investment landscape in the long-term?”

“There are certain things I am confident about. Fintech – not just the consumer challenger banks and payment services providers– but B2B companies that improve underlying infrastructure and legacy systems, will continue to be a particularly exciting sector for the VC industry. Data, and all that it underpins, from cybersecurity to the future of work, as well as quantum technology – tech that harnesses quantum physics to gain performance which is otherwise unattainable – will also be on the agenda.”

“As will ‘impact technology’ and the structural shifts it is waging on the asset class. As the market becomes more competitive, impact and sustainable technology solutions, will continue to play into fund managers’ search for distinction. Distinction has come in many ways, but impact has added a new dimension to that. We expect both LPs and managers to grapple with that next year.”

“The focus on unicorns has continued to hit new heights over the last year. But I ask myself how long this preoccupation will last. Certainly, it is one way to deliver a return (and a good one) – but it is not the only way. In 2021, dragon chasing will be equally important for LPs and VCs alike. Dragons, a company that returns an entire fund, are hard to find – but they are important lighthouses.”

“In terms of British Patient Capital, our focus will remain on selecting best in the class managers. We are optimistic for 2021 and expect the asset class to continue to attract more institutional investors. There is good reason too. On a one- three-and five-year time horizon, European venture capital has generally out-performed US counterparts, and consistently better than European Private Equity, according to Cambridge Associates data.”

“We have £1.5bn still be to be deployed. And we are more ambitious than ever to help more home-grown and fully funded, high growth companies to fulfil their potential to be players on the global stage.”

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