“The good news is, the world is still turning,” said Nic Brisbourne at the Glasshouse‘s “Show Me The Money” event in London last night. “Investment continues, though levels are obviously lower.” Nic quoted £114m garnered from VC funding in Q1 in the UK. “It’s down, but it hasn’t stopped.”
Alongside Nic, who’s a partner at DFJ Esprit, sat a familar face, Michael Birch, founder of Bebo, and a relatively new one, Andreas Lazar, MD of Allen & Company‘s London office. The panel, convened to dispel some of the myths surrounding the current UK investment market, was chaired by Rory Cellen-Jones from the BBC (“back by popular demand”, apparently).
“Media and tech giants aren’t investing in innovation as they normally would,” said Nic, “And VCs are more conservative at the moment, because financing and revenue risks are more acute. But if you can raise money, it’s a good time. Wonga‘s an example of a firm that’s doing well. And VCs are still looking to e-commerce as an area where business is still happening.”
Andreas Lazar explained why Allen & Co. chose to open their first overseas office during a downturn. “It took a long time to decide to open an office in Europe. On the one hand, our timing was questionable. On the other it was fortunate: we can be patient and grow the business over the next few years.
“It’s not all bad news. In the good times, a lot of VC firms could get started and raise money. More firms were available to write cheques. But a number of the venture firms that have been in the business a long time – Index and Accel, for example – have raised funds in the last 6 months. And they’re deploying that money. There are deals getting done. But we’re seeing money flow to businesses that can articulate a path to monetisation succinctly and directly, rather than more conceptual businesses.”
Michael Birch took a litmus test of the mood in the room. “How many of you think things are harder right now? Raise your hands.” A few dozen fingers tentatively poked the air. “And how many think it’s better?” Noticeably more hands shot up.
“That tells you something about the optimism of entrepreneurs,” said Birch. “And here’s another thing to remember: to succeed, you don’t have to raise money. You haven’t succeeded in business because you raised money. It’s just one component. We didn’t raise money at Bebo initially because we knew we wouldn’t get any – we had no credibility. But when we did take money, it wasn’t for the money itself: it was for the other benefits, like networking. Don’t get caught up in thinking you have to raise money to succeed.”
In the Q&A, Paul Carr’s recent column for the Guardian proclaiming the “death” of London’s internet start-up industry was raised and promptly dismissed. “For me, the big story here is that London and Europe is improving very fast,” offered Nic. “Fifteen years ago, there was nothing. Now, there’s a fair scene. It’s still a bit easier in Silicon Valley, but that difference is getting less. If you can stay here, fantastic – that’s great for the next generation. These things build on themselves.”
Birch agreed. “I’m not sure anything has changed in the UK since the recession. The UK has always been playing catch-up. But there’s a huge amount going on and some great success stories. Look at Betfair – and Skype, which is essentially a UK company. We announced our fund here and in the first few days we had hundreds of business plans emailed to us.” Birch was of course referring to PRO Founders, the new £30m fund he has set up with Brent Hoberman of Lastminute.com fame and now MyDeco.
There was an interesting discussion about the value of advisory services. To summarise: lawyers like to drag things out, so get a middleman. And Birch offered some sage advice for entrepreneurs looking to exit: “Sell in May of last year.” And so the discussion wound up, with Spotify and Playfish singled out as examples of companies the panellists are currently getting excited about.
The names Judith Clegg assembled last night didn’t disappoint: it was, as the promo materials promised, a “stellar cast”. But the discussion amongst these seasoned pros tended to go over old ground and received knowledge, rather than flare into fireworks.
It was a restrained crowd, too: neither Rory’s tomfoolery nor even the snazzy microphones hidden in our seat rests were enough to raise spirits above the occasional titter. However, perhaps some sobriety was in order: after all, this was a serious subject being discussed at a tricky time in the industry.