Julie Meyer: Venture capital can fuel European growth

VC Julie Meyer has seen a few start-up successes and failures. In this exclusive article for silicon.com she spells out key ingredients - think transparency, accountability and a focus on sales and talent - for the next generation for European tech start-ups...

Europe is under threat as never before. It is not 'Le Defi Americain' written about by Jean Jacques Schrieber in 1968 but globalisation which is forcing the average European employer and worker to compete with their counterparts on the other side of the planet. Regulating labour laws is a stop-gap measure. What needs to happen to revitalise the European economy is that the average European needs to want to contribute to its growth story. If we focus on being net contributors to the system, rather than net-takers from it, we will see the difference.

Small business growth and entrepreneur-led firms are a leading indicator of the health of any economy. If one is not growing, one is managing decline. For Europe to grow, entrepreneurship and venture capital in Europe must evolve. For European-originated or headquartered firms to be listed among the next generation of global market-leading companies, then we must create a systematic approach to identifying, creating and building new value.

I believe that venture capital can be a force for growth. The best investors know how to align objectives of all of the parties who can have an impact in creating or destroying value.

Twenty-five separate regulatory, tax, language and business environments slow the scaling of European start-ups.

Failure is too frequently considered a terminal condition, rather than vital learning in the process of becoming a well-rounded manager.

Too many founders of businesses are conditioned to believe they don’t have the skills to become world-class CEOs.

Too few CIOs in companies are willing to give a young private company’s products or services a chance. It requires on their part a significant ability to manage risk.

Overall, there is far too much focus on the capital rather than the markets and the talent which animates the capital. Deal-structuring is considered a black art rather than a process of determining fair rewards to all stakeholders in high-growth ventures.

Aspiring entrepreneurs should play to win. Too frequently young professionals in Europe are conditioned to believe it’s better to play not to lose.

Ariadne Capital, my firm, secured the investment of 24 of Europe’s top technology entrepreneurs as our founding investors because we felt that people who have created value and wealth have a lot to impart to the next generation of European entrepreneurs.

The US economy - where venture investment is already climbing again - has reaped huge rewards from a virtuous circle where new venture capital funds created by technology entrepreneurs, as well as from financial institutions, are reinvested in new technology with the active involvement of those entrepreneurs. This has underpinned successive waves of innovation that have propelled the US high-tech economy to its global leadership position.

Nick Ogden, a serial entrepreneur and founder of the WorldPay internet payment system and On-Instant network - an Ariadne Capital Investor - told me recently: “Like myself, it’s often entrepreneurs with technical backgrounds that come up with the original idea for a new company. It's vital that these individuals are helped subsequently in three vital areas - selection of the right people to grow their company, forming the best partnerships and closing the right early sales to ensure that growth is sustainable."

Venture capital's natural habitat is innovative sectors which are by nature risky and idiosyncratic. High levels of both financial and entrepreneurial skill must be combined to really make the money invested work to its fullest potential to both build new economies, create employment and systematically engineer profitable, successful exits for those shouldering the most risk – the brand new generation of European entrepreneurs.

Julie Meyer is CEO of Ariadne Capital and known as a founder and chief marketing officer of worldwide networking organisation and late 1990s phenomenon First Tuesday. She has over 15 years of combined venture capital investing, start-up operating and consulting experience. Contact her by emailing editorial@silicon.com.