Global Themes

On Globalization & Venture Capital

Live Blogging at EVCA, Barcelona

EVCA Logo  Javier Loizaga, EVCA Chairman inaugurated the conference this morning reminding everyone that a record amount had been raised by European VCs in ’05 – the highest ever if we ignore the “irrational” years of ’99-’00.Paul Deninger, Vice Chairman, Jefferies & Company, Inc. Chairman, Jefferies Broadview made a Presentation on current state of technology finance titled, Is this the European decade?” some salient points:

NASDAQ is still the foundation of how people “feel” about the technology market

  • Amount of activity is not even close to IPO activity pre-bubble (on NASDAQ)
  • By contrast, European markets showing strong activity (AIM as well as EuroNext)
  • But in terms of “quality deals ” (raise > $20m), NASDAQ has sustained its lead over Europe
  • Only one of the Top 10 Global IPOs last year was done in NY (compared to 4 of the top 10 in 2000 in US; of which 2 were non-US) – SOX to blame?
  • Liquidity on AIM for market caps of £50-70m is comparable to NASDAQ (this is stunning news…)
  • Tech M& A has been flat since 2001 in US but Europe is looking better (better than every year in fact except ’99 – 00 and in terms of amount/value better than every year except 2000)
  • The mood in Europe is in the right direction
  • Likely exit path for US backed companies has moved decisively in favour of M&A

Later in the morning, Paul got together with Charles Irving, Maurizio Caio and Richard Young (Manchester Seed Fund) for a panel discussion on “Critical Success Factors for European Venture”. Some of the points that I thought were interesting:
Maurizio said:

  • We should not blame exit markets for poor performance – but focus on building global companies
  • European investors drip-feed companies/ or do not given them enough money
  • In a globalizing world, building a global company is the foundation for success

Charles Irving was the most provocative. He emphasised that there is world beating technology and world-class teams in Europe – the problem is the “quality” of the investors – or more precisely, lack of quality investors

  • If you are not able to do “global diligence” on a European start-up, you are working half blind
  • The location is simply where you source the deal – the rest has to be global
  • Silicon valley VCs are gong to China and not coming to  Europe – we need to tell them that there are good opportunities in Europe

Maurizio said, “I wish all European VCs could be like Charles” (!) and mentioned that there are still not enough people with experience in industry on the investment side.

***

In the afternoon, I shared a panel with Ian Lobley from 3i, Graham O’Keefe from Atlas Venture, David Zhang from W I Harper, and Ravi Rakesh from SAP. Andy Tsao moderated the discussion…
We talked about India, China, the rush of Valley VCs in these two geographies and the relatively lukewarm response of Europe as these two economies throw up investment opportunities.Some of the points that we discussed were:

  • What is prompting the interest in Asia?
  • Has Europe missed the boat in China?
  • Is it possible for European funds (esp. the smaller ones) to have a strategy for Asia given the fund size and the overheads that may be involved?
  • How can portfolio companies be supported in their business expansion strategies in the region?
  • How can European VCs help their portfolio companies recruit more “international” (or at least having more international experience) staff?
  • Is there “genuine” product innovation happening in these geographies?
  • How does (can) a European investor differentiate himself/herself from a West Coast VC in these countries – do we have any edge?

As the conference moves into its final day tomorrow, I have mixed feelings…On one hand, I am glad that at least some of the challenges that we are going to face in the coming years are being acknowledged (Globalization, not enough “quality” exits, not enough “great companies”) On the other, a lot more still needs to be done….and I am not sure if we are out of the trough yet.

October 12th, 2006 Posted by | China, Conferences and Panels, Europe and Asia, Globalization, India, Venture Capital in Europe | no comments

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