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March 16 2004
by Julie Meyer
VC Julie Meyer has seen a few start-up successes and failures. In this
exclusive article for silicon.com she spells out key ingredients - think
transparency, accountability and a focus on sales and talent - for the next
generation for European tech start-ups...
Europe is under threat as never before. It is not 'Le Defi Americain'
written about by Jean Jacques Schrieber in 1968 but globalisation which is
forcing the average European employer and worker to compete with their
counterparts on the other side of the planet. Regulating labour laws is a
stop-gap measure. What needs to happen to revitalise the European economy is
that the average European needs to want to contribute to its growth story.
If we focus on being net contributors to the system, rather than net-takers
from it, we will see the difference.
Small business growth and entrepreneur-led firms are a leading indicator of
the health of any economy. If one is not growing, one is managing decline.
For Europe to grow, entrepreneurship and venture capital in Europe must
evolve. For European-originated or headquartered firms to be listed among
the next generation of global market-leading companies, then we must create
a systematic approach to identifying, creating and building new value.
I believe that venture capital can be a force for growth. The best investors
know how to align objectives of all of the parties who can have an impact in
creating or destroying value.
Twenty-five separate regulatory, tax, language and business environments
slow the scaling of European start-ups.
Failure is too frequently considered a terminal condition, rather than vital
learning in the process of becoming a well-rounded manager.
Too many founders of businesses are conditioned to believe they don’t have
the skills to become world-class CEOs.
Too few CIOs in companies are willing to give a young private company’s
products or services a chance. It requires on their part a significant
ability to manage risk.
Overall, there is far too much focus on the capital rather than the markets
and the talent which animates the capital. Deal-structuring is considered a
black art rather than a process of determining fair rewards to all
stakeholders in high-growth ventures.
Aspiring entrepreneurs should play to win. Too frequently young
professionals in Europe are conditioned to believe it’s better to play not
to lose.
Ariadne Capital, my firm, secured the investment of 24 of Europe’s top
technology entrepreneurs as our founding investors because we felt that
people who have created value and wealth have a lot to impart to the next
generation of European entrepreneurs.
The US economy - where venture investment is already climbing again - has
reaped huge rewards from a virtuous circle where new venture capital funds
created by technology entrepreneurs, as well as from financial institutions,
are reinvested in new technology with the active involvement of those
entrepreneurs. This has underpinned successive waves of innovation that have
propelled the US high-tech economy to its global leadership position.
Nick Ogden, a serial entrepreneur and founder of the WorldPay internet
payment system and On-Instant network - an Ariadne Capital Investor - told
me recently: “Like myself, it’s often entrepreneurs with technical
backgrounds that come up with the original idea for a new company. It's
vital that these individuals are helped subsequently in three vital areas -
selection of the right people to grow their company, forming the best
partnerships and closing the right early sales to ensure that growth is
sustainable."
Venture capital's natural habitat is innovative sectors which are by nature
risky and idiosyncratic. High levels of both financial and entrepreneurial
skill must be combined to really make the money invested work to its fullest
potential to both build new economies, create employment and systematically
engineer profitable, successful exits for those shouldering the most risk –
the brand new generation of European entrepreneurs.
Julie Meyer is CEO of Ariadne Capital and known as a founder
and chief marketing officer of worldwide networking organisation
and late 1990s phenomenon First Tuesday. She has over 15 years of
combined venture capital investing, start-up operating and consulting
experience. Contact her by emailing editorial@silicon.com.
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