This is done by applying a conservative comparison with similar public companies

This is done by applying a conservative comparison with similar public companies. For example, the successful Kleinwort Development and Mercury Grosvenor are both well under pounds 100m.In the past there have been doubts about the valuations of unlisted investments. The biggest are 3i capitalised at pounds 3.4bn and Electra at pounds 1.1bn.Others are much smaller. Yet by contrast, Mercury Grosvenor’s track record is influenced by the early backing it gave to some of today’s high-flying listed companies, such as Shire Pharmaceuticals and Shield Diagnostics.Some funds, such as 3i, have a vast portfolio, while others have just 20 or 30 stocks There is also a big difference in size of funds. Some funds, such as Candover and Electra, back the very large pounds 100m plus deals that make the headlines, while others, such as Foreign & Colonial Enterprise and Kleinwort Development Capital, will only invest in small and medium- sized companies, those between pounds 25m and pounds 100m.Most will not invest in start-ups (new companies with no trading record) or very high-risk sectors such as biotechnology. A typical venture capital deal, however, may see the financiers taking an 80 per cent plus holding.These venture capital managers do not like sharing their investments, even if this is occasionally necessary, so they get round it by having other “private funds” in their stable that will take on the extra stakes in any investment.A private fund is not quoted on the stock market and is made up of pooled capital from institutional investors (banks and financial organisations).There are also large differences in investment strategy. The funds make money from dividends from their investments, and then really cash in when a company in which they have invested either joins the stock market or is sold off.Funds in some sectors will often have similar portfolios In fact, their core holdings may even be the same Not so in the venture and development capital sector.

Pick the wrong fund, and you could lose much of your capital.
This sector contains unit trusts that can invest in unquoted companies (meaning businesses that are not listed on the stock exchange).It also offers specialist investment trusts that invest in unquoted companies.The funds in this sector work by injecting cash into firms, often after a management buyout where a private company is sold to its management; or management buy-ins, where outside managers are brought in. Here the 22 funds have completely different portfolios and investment criteria.Under the investment rules, a fund can only have a maximum 49 per cent stake in a private company. They are great fun for the adventurous who live on adrenalin. Those who prefer to watch the excitement from a distance would probably do better to stick to something more staid, like a UK blue-chip fund. Pick the right fund, and you might just see its value go into the stratosphere, leaving all the other investment funds standing. The venture and development capital sector offers the chance to back new companies and high-flying entrepreneurs at the start of their careers. VENTURE CAPITAL funds are the investment equivalent of bungee- jumping.

For now, spread betting is a telephone service.Spread betting aficionados can use City Index’s own web site to check the status of their accounts, and monitor their markets.Spread betting, for example on the futures and options market, has some advantages over the real thing; the minimum stakes are lower than for options contracts, and winnings, unlike capital gains from the markets, are tax-free.BETonline: www.betonline.co.uk; PA Sporting Life: www.sporting-life ; City Index: www.cityindex.co.ukReaders can email details of financial Internet sites, good or bad, to the author at hi-tech-investor dial.pipex . BETonline is something of a departure for the company, because it offers only fixed-odds bets.With spread betting, liabilities are open-ended, and it is possible to lose more than your stake. Spread betting is highly geared; the compensation for the higher risk is that winners receive handsome payouts.City Index has a large spread betting operation covering sport, taking bets on unusual odds such as the time of a first goal, the number of runs in a cricket match, or the number of red cards in soccer.Spread betting continues even after the start of a game, so logistically, Mr Belsham says, it would be hard to administer over the net. BETonline has far more detailed information through its links to the PA Sporting Life site. The Sporting Life news and archives are just a few mouse clicks away for statistics on past form.PA Sporting Life is one of the partners behind BETonline.