Finance
ean Story
By Julie Meyer V
enture Capital as an asset class is frequently derided as a failure in Europe. Speak to any fund of funds firm in Europe (and I have spoken to a hundred of them), and they will tell you that no one makes any money on venture capital in Europe. The big names in European early-stage venture in the late 1990’s have either moved upstream to buy-outs (Apax), disappeared (3i, NetPartners), been acquired (Quester, Frontiers Capital) or the investment teams have moved on (Benchmark, Add Partners, Atlas Ventures). Even the big venture capital firms do more growth capital than early stage/seed investments today.
The reality of entrepreneurship in Europe over the past decade and a half has changed dramatically. Today we have successful >€100 million firms such as Shazam, Spotify, Monitise, and Seatwave. Exits such as Autonomy and Skype where they have become major business units for their acquirers have shown the significance of the “start-ups” which are being built.
But Monitise, a portfolio company of my firm Ariadne Capital, now has a market capitalisation of nearly $500 million, and backed by VISA five times, wasn’t backed by a venture firm, but a systems integrator – Morse PLC. Dialog Semiconductor was floundering on the Frankfurt Stock Exchange until the current CEO Jalal Bagherli got into the cockpit. Other European big hits such as Net- a-Porter, Rovio (Angry Birds), Tiscali and SAP weren’t backed by VC’s until it became clear that they were going to be successful or at all; that is, it wasn’t risk capital. Rather, once the founders took the risk and built the firm, investors came in to profit from their hard work. Non- tech firms like Ella’s Kitchen are becoming major players without outside funding.
New venture teams like Amadeus Capital, Edge Investment Management, Enterprise Ventures, Dawn Capital, DN Capital, Mangrove, Wellington and Northzone have developed in parts of Europe creating franchises with strong teams. And yet very successful entrepreneurs like Glen Manchester with Thunderhead, his second venture, or Alex Cheatle with Ten UK, or Sara Murray of Buddi, her fourth, have bypassed the venture community entirely.
So, new successful tech-enabled firms are growing in Europe. Exits are happening providing returns to shareholders. And yet, the institutional investment teams that would put pension fund money into venture funds
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