Entrepreneurs hold the solution to Europe's sluggish growth problem. That's the view of Julie Meyer, founder of First Tuesday and Ariadne Capital, who flew into Dublin last week for KPMG's Inspire series of speaker events for business.
First Tuesday was the near legendary social network for internet entrepreneurs which brought dotcom founders together with one another and potential funders at networking meetings which took place on the first Tuesday of every month. “I wanted to start up a network of entrepreneurs because the funding markets hadn’t kept pace with entrepreneurship,” she explains. “It started in a bar really. I had Just come out of Insead and I saw a need to help people get funding.”
That was 1998 and she sold First Tuesday within two years for $50 million (€42.6m). She went on to found Ariadne Capital in 2000 and helped fund success stories such as lastminute.com, WGSN, Espotting, Skype, Zopa, SpinVox and Monitise. "I was lucky enough to work with some great people such as the Skype founders back then," she says.
At Ariadne, she pioneered the “entrepreneurs backing entrepreneurs” model for funding start-ups. “I set up Ariadne Capital to set the gold standard in entrepreneur funding,” she says. “I invited 62 leading tech entrepreneurs to come on board. These were all people who had been into the burning building and had come out the other side alive. We were the first to do that.”
Those initial Ariadne shareholders include the founders of BetFair, Easynet, Element14, Fusion Systems, Good Data, Hotmail, SES Astra, WILINK, WorldPay and others.
Fast forward to 2017 and Ariadne has completed £875 million (€987m) worth of transactions, between investments and exits. And Meyer remains as evangelistic as ever in relation to entrepreneur funding.
"I continue to believe that lack of funding for entrepreneurs is part of what is holding Europe back," she says. "Europe has probably got more money than any region in the world. The real wealth of Europe is not going back into wealth creation. Some people just want to create. We have always had them, it's just that we haven't always called them entrepreneurs. They are the creative force in the economy and society. The money is there. We know entrepreneurship creates wealth. But why isn't the wealth going into funding it?"
Part of the answer, as far as Europe is concerned at least, lies in the belief that any tech entrepreneurship worth investing in happens in Silicon Valley and the West Coast of America. Meyer, an American herself, says this comes down to savvy marketing which has enabled the Americans to convince the world that they own the playbook for tech entrepreneurship.
“We have the entrepreneurs, we have the wealth, and we have the market here in Europe with 508 million people,” she points out. “That’s why I founded the Ecosystem Economics Investment Platform (ECO2) investment platform. Platforms have come to every industry so it was inevitable that they would come to the venture capital sector.”
The Malta-based ECO2 offers investors, including high net worth individuals, private equity, and venture funds, the opportunity to invest in entrepreneurs through a plug and play investment grade fund management vehicle.
Sitting alongside this funding vehicle is EntrepreneurCountry, also Malta-based, which is a community of corporations and other organisations that wish to support entrepreneurship across Europe. Among the supports offered by EntrepreneurCountry is a test piloting service where entrepreneurs' new products are services are tested out in Malta first before being scaled up for the European market.
Platforms like ECO2 are very welcome, according to KPMG tax partner Olivia Lynch. "Irish entrepreneurs need to know that help is out there," she says. "There is a pressing need to educate them about the funding options available outside the traditional lending channels. We do need other sources of funding. Early stage businesses can quickly hit a cash flow shock. Entrepreneurs have a desire to develop new products, enter new markets, and that all requires cash. Profitable and successful businesses can run into trouble through lack of cash."
This presents difficulties for many entrepreneurs. Running a business and growing it is very different to starting one up on the basis of an innovative idea. “I read somewhere that an entrepreneur is no longer an entrepreneur when they focus on the solution rather than the problem. But if they don’t get the business basics right, funding isn’t going to help, it would be like sticking an Elastoplast on the problem.”
But there are ways of accessing business expertise without diluting the entrepreneurial energy within the company, Lynch believes. “You can get external advice and some funders like Business Angels bring advice and expertise with them. But you have to be careful when choosing a funder. Communities like EnterpreneurCountry can help as well.”
Ultimately, it is the business case that will determine whether an entrepreneur attracts funding or not. “Venture capital funds want to see a route to market and return on investment,” Lynch adds. “The bar has got much higher for funding and entrepreneurs need to surround themselves with people who will help them run the business and allow them demonstrate that route to market and profitability.”
And the last word to Julie Meyer “I have a friend who says that entrepreneurs aren’t the solution to every problem but I think they can be. They are the problem solvers. Society works better when it is organised around entrepreneurs. If we want to create more wealth in society we have to put wealth behind entrepreneurs.”
