Firms that stay focused and work hard will survive the downturn, and “good companies” seeking venture capital (VC) should continue to attract VC funding, the co-founder of First Tuesday Julie Meyer told siliconrepublic.com.
Meyer (pictured), along with Adam Gold, Nick Denton, Mark Davies and John Browning, started the pan-European gathering of digerati known as First Tuesday at the Alphabet Bar in London in October 1998.
The events were essentially a monthly gathering of start-ups aiming to form bonds and share knowledge and experience, but also aiming to make elevator pitches before venture capitalists and angel investors.
By the following year, the First Tuesday event had spread across 17 cities in Europe, including Dublin, and peaked at 50 cities.
“We did a back-of-an-envelope calculation and estimated that, in London, companies that attended the First Tuesday events signed US$115m worth of deals in the first year,” said Meyer, who now runs her own VC firm, Ariadne Capital, which has invested in firms such as Skype and SpinVox.
Meyer was in Dublin yesterday to address the annual networking and showcase event of Dublin Institute of Technology’s Hothouse Venture Programme, which through incubation, funding, mentoring and training supports entrepreneurs developing technology-based businesses. The event was also addressed by Google Ireland’s Eoghan Nolan, who is responsible for the internet giant’s global customer service technologies.
Meyer said the core principle of First Tuesday was to share intelligence, learn about who’s doing what and get your company discussed over a glass of wine.
“People have to meet, no matter what happens in technology. Online never replaces what we do in the real world, and people need to meet to facilitate and accelerate.”
As a venture capitalist and a veteran of the last technology downturn of 2000/2001, Meyer said what strikes her about the present time is how many networking events are being organised by the companies themselves in various regions. “There’s a nice blend of offline and online social networks featuring a long tail of media entrepreneurs and telecoms investors, and every group finds its affinity groups.”
She described the present times as “challenging”, but is certain that investment in promising start-ups will continue. “The groups that are going to continue to invest are entrepreneurs who have already cashed in. Entrepreneurs will back other entrepreneurs. It’s a virtuous circle. The guys who built businesses in difficult markets have a point of view that goes, ‘Yes the world melts, yes we’ve seen this before, but we worked hard, survived, cut costs.’
“The people who don’t know what’s going to happen are people who have come out of corporate environments that were structured, where they’ve never had to survive through lean times before.”
Meyer cited Worldpay founder Nick Ogden, who said the one achievement he is most proud of is never having missed a payroll.
“Worldpay was sold to Royal Bank of Scotland, but Ogden’s proudest moment was keeping his people paid through the tough times. It encapsulates the fact that people think entrepreneurs are just all out for the money. But what they really are out for is accountability; how to be 100pc responsible for not letting people down, getting the payroll out, not taking their own salary some months. They don’t always work for themselves, they work for everybody.
“Entrepreneurs are people who choose to live abnormal lives. In this market, what will separate the men from the boys and the women from the girls is the fact that the people who will cash-out in 2011 and 2012 are working very hard right now through the downturn, not off doing MBAs.”
When I ventured that the current credit crunch is impacting VC investment in a tragic ways, Meyer responded: “I don’t think of it as a tragedy. Technology markets don’t mirror financial markets. Broadband penetration is continuing to build new economies. Companies such as Skype wouldn’t be here today if there wasn’t broadband.
“There will be other drivers such a mobile broadband, and more people will use the mobile phone as a remote control for their lives. While the banking system and stock markets go through their changes, technology will continue to creep into people’s lives and good companies will continue to get funding.”
Last month, renowned Silicon Valley VC firm Sequoia Capital – which invested in Google, amongst other firms – dropped a bombshell when it delivered its infamous “RIP Good Times”, telling its portfolio companies to rein in spending and saying now is a bad time to expand your business or launch a start-up.
Meyer argued against this approach. “Not one of our CEOs or any of the businesses we invest in need to be told to cut back. They already know this, they are smart people and that’s why we backed them.”
Going forward, Meyer conceded the landscape has changed irrevocably, but said firms that emerge on the other side will be battle-fit and pragmatic.
“You’re not going to see fewer start-ups. But what you will see are firms that will live by their wits, which were built using their own resources, as well as family rounds and leaner VC rounds.
“Without question, the VC community is going to be much more choosey about where it will invest, but by no means is the market closed. Great companies will get funded,” Meyer concluded.
By John Kennedy
Pictured: Julie Meyer of Ariadne Capital and co-founder of First Tuesday
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