Venture capital plays an increasingly important role in UK business, acting as the elixir of life to many young firms with little more than an idea and an opportunity to their name.
Traditionally, the purse strings have been held (in people’s perceptions at least) by a few fairly inaccessible individuals, but a new generation of young dealmakers are gradually transforming the image of the venture capital arena. Here we profile the brightest stars of this new wave.
The universal choice
Ask leading lights in the venture capital community to name those spearheading their industry’s next generation and the chances are that Sonali De Rycker’s name will be among the first to trip off their tongue. Indeed, as one industry expert explains, ‘I think just about everyone would want her working for them.’
Harvard-educated De Rycker’s present employer – the multinational, technology-focused Atlas Ventures, which currently has more than billion under management – certainly appears to appreciate the esteem in which she is held.
Now in her early thirties, De Rycker has been with Atlas since 2000 and has recently been promoted from principal to partner within the group’s information technology team.
‘We look to develop people in-house,’ says Atlas senior partner Christopher Spray of the system which has enabled De Rycker (amongst others) to flourish. ‘You see some people who you assume will be extremely successful venture capitalists and yet their deals just don’t work out, whereas others take more of a risk and seem to have that magic ingredient. It’s something you can only spot over time.’
De Rycker clearly possess this ‘x-factor’, while Fred Destin – formerly of Dresdner, Goldman Sachs and JP Morgan and a relative newcomer to the Atlas team – is another expected to rise in prominence over the coming years.
Though a comparative minnow in relation to Atlas Ventures, early-stage technology investor Add Partners commands a proud reputation, not least on account of investment directors Peter Sturn, aged 34 and Rupesh Chatwani, 33.
Billing itself as a pan-European investment business and typically investing up to £10-£15 million in early-stage technology targets, Add Partners has completed a total of five investments so far this year, making it an extremely active player in the market. This is somewhat surprising when you consider the group’s focus on high value exits.
In a recent interview, Chatwani asserted that ‘people are too often willing to take the 0 million exit rather than push for billion,’ a point on which the mild-mannered Sturn agrees.
‘We do see ourselves as being more Silicon Valley,’ he admits, ‘and we are definitely out there looking for the disrupting technologies with the greatest potential returns.’ With European markets still depressed, however, he concedes that ‘we would expect to seek exits in the US when the time comes.’
Among those backed most recently were radio frequency identification system developer Tagsys and UK-based computer games developer Lionhead. Over at IDG Ventures, former corporate financier Anil Hansjee has being touted as another up-and-coming technology dealmaker – after playing a particularly prominent role in the group’s backing of the fantastically-named Shazam Entertainment – as is Krishna Visvanathan of 3i. Visvanathan, according to one well-respected sector statesman, represents ‘a real fresh of breath air’ within the industry.
From entrepreneur to venture capitalist
Away from the high-tech world, 27 year-old Andrew Cavaghan has compiled an extremely impressive CV to date.
After training as a lawyer, Cavaghan turned his back on the profession post-graduation and established his own media company. In 2001 he joined the then fledgling London Seed Capital as a fund manager and considers his experiences as an entrepreneur key to subsequent success.
‘It has enabled me to empathise with those running the business,’ he explains, ‘and it’s also taught me how to spot the crap and identify where real weaknesses are likely to be.’
Having completed nine deals in three years, Cavaghan has, just this month, been snapped up to help manage Octopus Asset Management’s award-winning Eclipse VCT. ‘I learnt an awful lot at London Seed,’ he reflects, ‘but realised that to move on with my career I’d have to go somewhere I could work on larger deals.’
Like Cavaghan, Khilan Dodhia of Barclays Ventures also benefits from previous business management experience.
Dodhia started his own music promotion business whilst studying at the London School of Economics, championing US acts such as Boyz II Men and Snoop Dogg in the UK and claims to now revel in the entrepreneurial aspect of venture capital. This is reflected by his involvement, last December, in the sale of holiday accommodation business Medhotels to lastminute.com for £21.5 million. This was several years after Barclays first lent its support to the business. Dodhia cites this as a particularly satisfying transaction with which to have been involved.
Named Young Personality of the Year at mid-October’s Investor AllStars awards, Dodhia’s star is now perhaps the brightest of all the young dealmakers. The Investor AllStars judging panel viewed his empathy with business owners as key to giving him a vital edge over his peers.