Fram has worked closely with the Venture Capital (VC) Industry for almost 15 years. Our Capital Raising & Marketing Practice has placed business development professionals in virtually every part of the UK, and our Investment Team hiring experience is extensive. This gives us an excellent insight into hiring trends. For the most part, clients have been keen to see candidates shortlisted with a finance background, or more specifically an ACA qualification and failing that clients often like to hire investment bankers. Of late though, we have seen far more interest in building out more diverse teams. Whether it be ex-founders, non-finance qualified investment managers, or those with specialist backgrounds (healthcare, IT experience), there is more much more of an appreciation of the benefits of building investment teams in venture capital with broader backgrounds.

We all know that 2023 was a tough year for the industry. According to the British and Venture Capital Association (BVCA), private equity and venture capital investment into UK business fell by over 30% in 2023. Corporate Venture Capital (CVC) was a bit more resilient. Whilst still by far Europe’s largest market for private capital, it was a bruising year for the sector. UK-led investment in 2023 was £20.1bn vs £36.8bn in 2021 - investors ran scared. However, since Q4 of 2023 we’ve started to see firms increasing headcount in their capital raising teams. Indeed, Mercia reported spectacular organic inflows in April implying generally better capital raising conditions. This in turns means there’s money to be deployed and so firms are starting to think about hiring Investment Directors, Investment Managers, and Investment Associates again.

In the evolving landscape of venture capital, the composition of investment teams has become more critical than ever. While professionals with ACA qualifications or backgrounds in investment banking bring valuable financial expertise, the inclusion of entrepreneurs and individuals from various investment backgrounds adds a distinct advantage. Entrepreneurs, in particular, offer firsthand experience in navigating the challenges of starting and growing a business, providing insights that are invaluable when assessing the viability of new ventures.

The diverse perspectives within a team enhance its ability to work with a wide range of management teams across different stages of growth. Whether dealing with early-stage startups emerging from incubators and science parks or more established firms seeking to scale, a team with varied backgrounds can offer tailored support that aligns with the unique needs of each business. This strategic support is crucial for helping firms not only survive but thrive in their respective markets.

Moreover, the process of originating deals benefits significantly from having team members with different focuses and networks. Those familiar with the intricacies of university spin-outs, for instance, can navigate the specific challenges and opportunities within this niche, bringing valuable deals to the table. Each sector possesses its own nuances, and ex-practitioners or those with broader backgrounds can provide the in-depth understanding required to navigate these complexities effectively.

Higher rates and tighter monetary supply over the past two years has made the venture capital landscape more challenging. However, the recent uptick in capital raising indicates a renewed interest and need for strategic deployment of funds. Quality investment opportunities are emerging, and having a team with a diverse set of skills and experiences can give firms the edge needed to capitalise on these opportunities. Embracing diversity within investment teams is not merely beneficial, but essential for driving sustainable growth and success in today's VC competitive market.