Re: UKNM: anyone got capital?

[azeem azhar, lists]

At 7:03 pm -0400 16/6/99, David Bentley wrote:

>I would be interested to hear people's views on why independently funded

>e-commerce (or content) sites are quite few and far between?


>It seems that lastminute.com and QXL are doing pretty well and have pretty

>high exposure, but I would have thought there would be a boom in start-ups

>with the pretty awesome increase in the UK online community over the past

>year.  Instead I see the traditional retailers and businesses (or the US

>internet retailers) making the tentative steps and allowing them to start

>to cement their position in this new marketplace in the consumers' mind.

>

>Is it the same old story of the financial community not investing in UK

>start-ups?  Or is it that the size of the UK market still isn't big or

>mature enough to justify and find reasonable return for start-up

>businesses?  New economy or just a new media?


Good point.


A number of things:


1. The amount of capital hasn't been as significant for the usual reasons

(lack of entrepreneurial culture, risk aversion) and the fact that a lot of

our VCs simply didn't get it; and with exception of generally the A*s

(atlas, apax, amadeus) seem to be bandwagon jumping (there *are* others who

aren't): they missed a boat, and now they're back. Remember that VCs in the

UK were oriented more around MBOs than start-ups.


However, there are still some sticky issues:


1. Where is the exit? We don't have a booming secondary market (if you can

call NASDAQ that) like NASDAQ, or to a certain extent the Neuer Markt. What

we have is the slightly flatulent AIM (aimless?) and OFEX, a byword for

penny-stocks. So the multiples that US VCs see even when they come in late

to a business (2nd/3rd or pre-ipo mezzanine) don't appear to exist here. So

why bother? There are some signs this will change, hopefully Freeserve's

IPO will wet the appetite without draining all the Internet-destined

capital.


2. Are the ideas any good? Silicon Valley is to drive, brains and

initiative what LA is to blondes and himbos. So we have an incredibly

aggressive ambitious hothouse where equity is it, risk is good and failure

even better. This is documented in several places, but a quick read-worthy

is The Economist's SNV survey from two years ago (not one of mine). We seem

to have a disproportionately small number of "great ideas" but they can

still happen, viz: Orchestream (nerd technology), Moreover (biz

e-publishing). And when we do have blockbusters, Keith Teare's RealNames

and a couple of others, we take them to the action, somewhere in the Valley.


3. Do we have the resources and support networks that are taken for

granted? London isn't yet great at networking. NY now has NYNMA running

events virtually nightly;  we have FirstTuesday which is great for people

trying to get through to capital, but there is still an energy missing from

the whole debate. Maybe its geographical, SNV is 50 miles of brainsex,

Silicon Alley is at least within a spittable radius (if you've got good

lungs).


4. Do we have good journalism in this area?: Let's face it, we don't have

the Herring over here. We do have Felicia Jackson doing a great fortnighter

called NMI, but it is ludicrously overpriced and, as a result, woefully

undercirculated.


Back to your original question, my impression is this:


1. There is money around and lots of it, but we could still do with more.

If you need some, I'll help you find some. (Usual terms apply.)


2. Talent and skills still get in the way of things for entrepreneurs. The

best business plans I've seen are still American. (Admittedly, I've not

seen many compared to some but its telling: Brits seem to lack some of the

give my $40m dollars and I'll give you the earth ambition.)


Exceptions, there are lots,I'm sure:


Boo.com, Moreover.com, Lastminute, Orchestream, Mondus.com, to name a few.

A better source is Murray Hancock's FourLeaf (www.fourleaf.com) and

FirstTuesday.


You missed the Herring event, Venture Market Europe, which was kicking.

a



azeem azhar 			| www http://azeem.azhar.co.uk/

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