3i To Stop Investing in Startups

The Financial Times reports that 3i, a venture capital and private equity firm, will stop investing in the early stage companies. The company now plans to focus on growth capital, buy-outs and infrastructure.

The company has been unable to cope up with the write down of $1 billion during the 2001 technology burst and since then has been reducing venture capital assets as part of its portfolio.

According to Philip Yea, 3i’s chief executive, the move is related to organizational transformation and is not driven by market factors. He said,

Companies need to be clear what they are good at and what they are not. We want to focus on where we are distinctive. It is a statement about us, not about the markets.

The analysts feel that it might not be the right move as the buy-outs are losing shine and that venture capital might perform better than big buy-outs.

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Posted by Vikrant on Mar 25 2008. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry