There’s a new hand on the tiller at the Old Boys’ Club (aka BVCA), the redoubtable Anne Glover.

There’s a new hand on the tiller at the Old Boys’ Club (aka BVCA), the redoubtable Anne Glover.

Anne Glover is feeling pretty chuffed with life at the moment. She’s risen to the top of a notoriously retro male industry. Amadeus, the highly-regarded technology venture capitalist that she founded with Hermann Hauser, is seeing opportunities opening up. And she’s positive about the future for venture capital over the next few years – or at least as positive as such an experienced negotiator is ever going to be with a journalist.

‘We’re now emerging into a market where an IPO is feasible,’ she observes. Indeed, one of Amadeus’ star investments, Cambridge Silicon Radio, has recently floated on the London Stock Exchange. She enthuses, ‘It’s a wonderful company; it’s beaten many start-ups in that space [it makes Bluetooth chips for mobiles], including those in the United States. It now faces competition only from more mainstream businesses.’

The emergence of more stable stock market conditions is a prerequisite to a successful run for venture capitalists, especially those in the technology space, which is where Amadeus sits. Her thesis is that a global technology company needs £50 million of funds to take it from start-up to profitability. All this cannot usually be provided by VCs. ‘Public markets dip in and out of venture capital. In a boom time, the VC could provide £10 million and public capital could make up the rest. In bear markets, layers of funding disappear and a venture capital fund has to find all the layers of funding that are needed. This is very difficult to time with public markets, so you have to plan for down periods.’

Bear market havoc

Glover operated through the 1990/1 recession when the ability to finance by debt disappeared, but in the last downturn, it was sources of later-stage equity that evaporated. The net result was that in 2001/2 Amadeus started losing companies that didn’t have the right business model. ‘We were scrambling to close down companies professionally. However, some of the best companies have pulled through and are emerging profitable today .’

Havoc was wreaked not just amongst technology companies but amongst technology venture capitalists also. She regards her main competitors as Advent, MTI, Atlas, Benchmark and Apax, among others. But she comments on the reduction in firms operating in this area: ‘There used to be 400 investors in this space, but between July 2002 and June 2003 only 28 firms made investments. It’s shrunk that much. As soon as the market is better though, competitors will flood back in.’

She continues, ‘You can’t get people to take risks when the market is down and we all took far too many at the top.’ There is also an acknowledgement that the industry made terrible decisions during the bubble [the internet boom in 1999/2000]. ‘Environment does cloud judgement.’

Better times are on the way

Her prognosis is for gradual recovery rather than an immediate return to the good times. Amadeus began investing in earnest in new companies in 2003, at the stock market low in April, but won’t start thinking about a new fund until 2005 – of course, how successful that will be is entirely dependent on what returns can be driven from their two existing funds.

Glover’s drive to set up her own business has its roots in her vague feelings of dissatisfaction with what she was doing in 1994/5. From being part of the investment team of Apax, she had become chief operating officer of one of its companies, Virtuality Group, which was listed on the stock market. ‘An operating job wasn’t a natural home for me, although I was competent at it.’ The solution she found was to ‘put my money where my mouth was’ and started acting as a hands-on business angel – as she puts it, ‘very little money, very active investor’.

‘The road to Damascus’

A crucial stage on the road to Amadeus was a Red Herring conference in Europe in 1996 [Red Herring was a US magazine that became regarded as the village pump of the technology venture capital world; it’s now defunct]. Glover remembers, ‘The room was full. There were several bulge-bracket US bankers, US lawyers, European VCs and 12 individuals from the UK venture capital industry that I recognised. I realised something was happening that BVCA members were not participating in; that is, a revival of early-stage technology investment.’

There followed research and fact-finding, until eventually she realised that the US guys were not going to come to Europe to fund technology here so there was a vacancy for a world class European VC. The next stage was networking, trying to get support for her idea and eventually a seminal moment was meeting the legendary technology innovator, Hermann Hauser. He too was trying to set up an IT fund. Glover’s clinching point to him was, ‘Yes, but you don’t need to, I do!’ For the next 18 months, they worked together on some projects and encountered several appropriate fall-outs on business issues.

Eventually, Hauser was approached by Microsoft, Glover was backed by Gilder and the whole process gelled; there was the critical mass to go on the road and raise a fund.

Seizing the moment

For the first fund, they raised £50 million in six months. Glover recalls: ‘Microsoft was an unbelievable asset, which I hadn’t expected. The endorsement opened doors that I would have had great difficulty going through.’ Four years of entrepreneurial activity had culminated in the fund and the foundation of Amadeus. A second fund of £235 million was raised in October 2000. ‘We’d got our timing right, but it was based on our analysis. However, we hadn’t expected the bubble. It’s an entrepreneurial
characteristic – you work bloody hard but you have to seize the moment.’

Nowadays, Hauser adopts the role of chief deal ‘doer’ and technology evangelist while Glover is the CEO. She can now put her own management philosophy into place – a far more consultative approach than that normally espoused by the traditionally male-dominated VC world. ‘I set Amadeus up to be a partner not an adversary, although that doesn’t diminish responsibility for being tough when necessary.’