In a recent TechCrunch article, Nick Halstead of fav.or.it wrote some observations on the government’s new debt-related support interventions for small and medium businesses. For odd reasons, though, he concluded the article with a brief “scathing” criticism of NESTA Investments. Amusingly, this last paragraph seems to have generated more debate than the substance of his article. As an ex-NESTA employee, I felt obliged to join in the fray.
A few words in defense of NESTA: as a CEO of a web 2.0 start-up, I certainly sympathise with your frustration. However, it would be arrogant of us to assume that “Technology” only includes Web 2.0 developments. Indeed, Web 2.0 activity in the UK only comprises a fraction of technological development, and associated investment into this space. As a technology fund, NESTA Investments actively pursues and manages a portfolio of investments in ICT (particularly high-tech hardware), biotech, and cleantech.
Additionally, as NESTA funding currently originates from the public purse (technically, from lottery proceeds) as taxpayers we should be pleased that they are investing their resources on areas in which they have solid expertise (and accordingly, can make more intelligent investments and provide meaningful support to their portfolio), rather than pouring money into whatever technology seems ‘hot’ at the moment.
Furthermore, as can be seen by the popularity of the myriad web 2.0 networking events, there are a number of other investors, both angels and institutional players, now active in the Web 2.0 space. While there is certainly room for additional investment in this realm, it seems entirely appropriate to me that NESTA spend its limited resources on areas where there are fewer private sector players (and accordingly, a more significant equity gap). Don’t get me wrong – I’d be overjoyed if they launched a web 2.0 fund – but I do understand their rationale for not having done so yet.
Finally, just because NESTA Investments is not active in Web 2.0 work, does not mean that NESTA is not involved in the social media space. Indeed, they have an entire programmatic stream, called Web Connect, devoted to investigation and support of highly innovative applications of web 2.0 concepts.
Coming from a country (the US) with no real analogue to NESTA, I’m constantly amazed that people so harshly criticise having a quasi-government agency focused on technology, creativity, and entrepreneurship – or, in other words, the future. I suppose that fact that it is the subject of growing debate could be seen as a sign of its growing significance and repuation. I certainly have my own thoughts on how NESTA might improve and evolve into its next incarnation, but they are based upon experience and analysis of the organisation and its activities. And despite such reservations, as a UK resident I can only consider myself luck that such an unusual and forward-thinking organisation exists.