The choice of Uli Fricke to chair the European Venture Capital Association (EVCA) must have seemed natural. She’s passionate about entrepreneurship and venture investing and she doesn’t take ‘no’ for an answer.
‘Something I hate is people who tell me “that won’t work” before they’ve even started to think about it,’ she says. ‘Which sometimes makes me a very inconvenient customer.’
Fricke has taken on the EVCA’s top job at a challenging time for private equity firms. With many still bearing the scars of the recession, they face a new onslaught from the EU’s red tape brigade in the form of the Alternative Investment Fund Managers (AIFM) directive.
That unpopular piece of legislation looks set to force companies that accept third-party investment to disclose information that could put them at a competitive disadvantage, as well as making non-EU investors raising funds in Europe jump through extra hoops.
The EVCA, under Fricke’s leadership, fought the AIFM Directive hard, but couldn’t stop it being adopted by the EU in November.
However, she insists that she and many other critics of the new regime were listened to. Lawmakers are working on a ‘passport-style’ scheme that would enable investors to operate across Europe, rather than having to gain approval in each individual country. ‘It’s something that will be dealt with in subsequent legislation, so it’s not ideal, but it is something,’ she states.
Like many who have spent their lives working with early-stage companies, Fricke likes to take a positive angle on things. ‘I’m a very energetic, passionate, forward-looking person,’ she says, ‘which has always helped me to overcome challenges.’
Even during her university days, studying for an MBA in the ancient town of Worms in south-west Germany, Fricke was close to the cutting edge of technological innovation.
She worked as a programmer for a German system called BTX that preceded the internet, allowing users to interact with pages of content transmitted down a phone line and displayed on a TV set. ‘I’ve always had an affinity with technology, and working with very dynamic, fast-growing companies,’ she says. ‘Building them – internationalising them – has been a theme of my career.’
Clearly, BTX didn’t have a long future ahead of it, but the company Fricke worked for at that time survived the transition to the internet and is now part of travel and tourism IT group Amadeus.
As a fresh graduate in 1991, Fricke found a range of interesting career opportunities opening up. She became head of sales at DFSR, a company arranging language exchange and au pair programmes for German students, and three years later became a shareholder and managing director.
Though not lacking in confidence, she admits that she knew less than she thought she did about business. ‘When I was 25 and became the MD, I thought, “Ha, now I can demonstrate all the wonderful things I know.” Time has proved that I still have a lot to learn,’ she admits.
Nevertheless, her involvement with DFSR led to Fricke spotting another, bigger opportunity to arrange insurance coverage for people who reside outside their home countries, such as students and expats. This led to the founding of CareMed, in which she served as CEO until 1997 – the year she started Triangle Venture Capital Group, which she still runs today. All this before she was 30.
Boundless enthusiasm and confidence are common qualities among young entrepreneurs, but an eye for detail is rarer. Perhaps that’s why the meticulous Fricke seems to have largely avoided the painful learning experiences that many entrepreneurs go through in their twenties.
‘I am a very strong believer in focusing on operational execution,’ she states. ‘You might have the most wonderful idea, but if it is not efficiently executed then it won’t be successful.’
What led Fricke to venture capital was the Starkenburg Enterprise Forum, a project to help post-graduate students commercialise their research. She jointly initiated the Forum with Bernd Geiger, who had a technical background that was a perfect foil to Fricke’s commercial savvy, and who became Triangle’s co-founder.
She recalls, ‘There was a great deal of wonderful technology, but there were no real structures in place or capacity to fund young technology companies. Being an entrepreneur, as I am, I started to think about what could be done to fill that bottleneck in the market.’
Triangle soon became Fricke’s main focus, and CareMed was sold to a US acquirer in 2001. ‘It was profitable from day one,’ she says. ‘It never needed any external capital. We could manage a significant volume of insurers with a very efficient, small team.’
In fact, the company only employed eight people in Europe and four in Canada, yet had a turnover of more than €10 million at the time of its sale.
Fricke’s success with CareMed was certainly a good preparation for helping start-ups to use capital efficiently at Triangle, a firm that has never deviated from its entrepreneurial, early-stage roots.
According to Fricke, the early-stage market in Germany is underserved by its investment community, especially considering the size of its economy – easily Europe’s largest in GDP terms – and its high concentration of universities. There is a very active state-backed investor, High-Tech Gründerfonds, but this isn’t enough to plug the gap, she adds.
‘HTG invests around €500,000 per venture and that’s pretty much it. After that they need a VC investor to join them. They make 40 to 50 investments a year, and we are the largest economy in Europe with 75 technical universities,’ Fricke remarks.
Certainty of funding
Triangle’s approach is a little different. Rather than drip feed six-figure sums into businesses in separate deals, it tends to make commitments of between €1.5 million and €2.5 million for its first investment, but pay it out in tranches based on the company reaching particular milestones. The aim is to offer more certainty and security of funding.
The firm has raised five funds since 1997, starting at €10 million and building up to €100 million for the latest, which it is running in partnership with the European Space Agency. Fricke is particularly excited about this one, named the Open Sky Technologies Fund, which aims to take space technology and commercialise it for terrestrial applications such as medical devices.
The fund has made its first two investments: iOpener, developer of a tool that collects real-time data at racing events and feeds it live to gamers via the internet; and takwak, which makes “rugged” mobile phones with navigational aids for hikers and skiers.
Notable successes for Triangle include Technolas Perfect Vision, a laser eye surgery specialist that the firm first backed in 2000. It now has revenues of more than €60 million and employs 260 people.
The argument for venture capital has been weakened by question marks over financial performance. Figures compiled by the EVCA itself, like those of UK counterpart the BVCA, are far from impressive.
‘We looked into that very thoroughly, and the biggest problem is the statistical sample of funds that report into the performance figures,’ says Fricke.
‘Unfortunately, this is not representative of the active players in Europe. A lot of funds in the sample raised money before the dotcom crash and were involved in internet businesses. They have not exited all those businesses and have never raised follow-on funds. You can’t invest in those teams now, but they are still in the sample.’
Such funds weigh down the figures, as does the fact that ‘a number of very, very successful VC firms are not providing data’, claims Fricke. ‘We are working to get everyone to report their numbers and provide a more realistic perspective of what happens today.’
Despite the daunting tasks ahead of her, there isn’t a note of cynicism in anything Fricke says. ‘There are always challenges, some small, some large: you can let them bog you down or you can try and find solutions.’