Do CEOs of European VC backed Technology Companies get the necessary support, resources and time to succeed?
Answers (19)
ROGELIO N.
Chief Technology Officer at Acodavision
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Philip,
It is very interesting question, but it is my experience that it is a function of where is the geographical location of the VC's that determine the level of assistance and support needed to succeed. I guess it is the result of the level of sophistication and experience in the VC game. But I am familiar with only a very small sample of deals in high-tech only.
However it seems to me that if you get your funding from VC's from London or Zurich your chances to receive the necessary support and assistance are there. Also that they will provide you with reasonable time tables for success. Also in the case of technology created at universities such as Oxford, Cambridge and University of Bassel you see that VC's have provided to entrepreneurs with the necessary coaching and extensive networks to expedite the time for liquidity events.
Rogelio
ROGELIO N. also suggests this expert on this topic:
Philip,
I'm sure goegraphy is a factor, but the quality of the individual VC is probably a much more important factor. I'd suggest you ask for references from other CEOs they've worked with.
Another suggestion is to ask which individual they would put on your board (assuming that's something they're asking for - it often is). Check the individual's references too. You're going to be working closely together for some years!
So, the simple answer to your question is "Yes, if you work with the right VC."
Good luck,
Stuart
Osvaldo Spadano (.
CTO at Alexandalexa.com, Lean Thinker
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CEOs will probably get support if they have chosen a good VC with a good reputation, if they have a good board, if they listen and accept help, embrace some basic governance, put their ego to one side, and accept that the company is not their baby. If employees get the necessary support, resources and time to succeed from a CEO, that CEOs will probably get the same from a VC.
Osvaldo
Unfortunately I think the answer is more complicated than what is indicated by the responses so far. Generalizing a bit (hard to avoid with such a abstract question), I would say that European VCs would tend to give you the time to succeed, but not nessessarily the support, while US VCs flip it around: they give you the support and resources but not the time. This does vary between VCs and ultimately it's about who you work with...just had a converation about it today - it's not about the VC, it's about the people.
Rarely. Example - each venture has to go thru the same stuff (recruitment, contracts, option agreements, office space, ....) as if it was the first time a company had ever had to do it.
Having sold to the entrepreneurial side of technology firms for the last 11 years my experience is that the US has a much healthier risk culture when it comes to speculating to accumulate. I am a Brit based in London and yet 85% of my clients. partners and sponsors are US technology firms and this is not for want of trying to sell to European firms.
European VCs (and businesses) want more iiii dotted and tttt crossed before they invest and this has the net effect of them investing in lower-risk lower-return businesses more often, because the US VC firms will beat them too the punch. If dealt with some businesses (typically French) that almost want all risk to be eliminated before they invest. Which is crazy because no risk = no return.
Where is the European Google, You Tube, E-Bay or Amazon?
We had Skype but that has been bought by a US company. The US are kicking Euro arse and always will until we learn what risk-reward is about.
Currently europeans as a general rule don't have the belly for backing risky ventures with massive growth potential and their sales culture which is less proactive and more inclined to relationship selling (putting a cap on growth) doesn't help.
From what I have seen it depends on both the VC and the CEO.
A good VC will give the expertise, network, money and time to succeed - within reason. In turn they need to see progress and results.
The more focused the CEO is on the shared picture of success, the customer, executing brilliantly, adapting quickly, open to ideas and help and communicating well, the more support they are likely to get.
Where I believe there is room for improvement is how VCs use their vast experience of 'seeing it all before' to share their knowledge across their investments, especially at key points and challenges in the businesses. It is both reasuring for the CEO and productive.
There is definately room to leverage 'infrastructure' - legal, financial resources etc - to better advantage and efficiency.
And lastly there is room for improvement in nuturing talented less experienced CEOs.
I can only speak for France, it seems that you do get some support here, but things do take a lot of time. I would also backup Mr. Grimer response in that VCs are take less risks. As for one of the french sucess stories, I can recommend reading the short book "They Succeeded their startup, the story of Kelkoo" to see how company was born (including all the funding rounds and stories)
Douglas L.
Founder & CEO, Clean Energy pipeline, Global Security Finance, VB/Research
Philip,
Interesting question. My organisation monitors the activity of 3,000+ VC / PE funds). US VCs are typically are much better at this. European VCs can be slightly parochial - they have a tendency to look for national champions rather than worldbeaters. Companies like Skype are very much the exception in Europe rather than the rule.
Links:
Hi Philip,
I think they should be getting as long as they operate according to accepted standards of conduct, reporting and valuation and has a strong network of professional advisors to support its increasingly important role in the European economy. And i hope there is going to be a forum coming up in October in Stockholm...
Nigel D.
Wireless and Mobile Strategy, Technology and Business Development Visionary
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Europe is generally risk averse. I have personally only seen investment in risky enterprises by the investment arms of enterprises that themselves would have been considered risky at the time they succeeded (Nokia being a very notable example).......... where Europe does a reasonably good job is in the area of spinning off companies associated with academic research (for example Cambridge Display Technologies, Plastic Logic et al). This is not just a question relating to VC support of new enterprises...........Europe has a history of simply not investing, even in existing organisations with a good track record. Exceptions seem to make the rule here.
Nigel
Adrian C.
Editor-in-Chief DailyDOOH, acotterill@dailydooh.com, LION 7,183+ #112669
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Yes if you choose a VC in your vicinity (or they choose you because you are local) and Yes if you choose a VC with the same aims - investment amount, exit strategy, timing etc. Remember they want it to work as much as the entrepreuner does.
Resources? no. One reason not joining your leadership program, frankly, is we cant afford it. Everyone in the digital industry goes on and on about how we should better support entrepreneurs and complain that Europe, let alone the UK, doesnt have its own Google, MySpace, Facebook etc...Bebo doesnt count as he moved to the U.S. years ago to do it and get funded ... The fact is Euro VCs dont have the vision or the level of risk taking drive to fund ideas early enough and heavily enough. Name me one big digital asset that has got there without significant funding - if you can name one I bet you cant name two.
Until European VCs understand that you're going to have to back 50 companies, each with a 7 figure sum and assume a 90% failure rate, with 5% making some return, 4 breaking even and 1 making you x300 investment and do this EARLY and I mean REALLY EARLY on in their life-cycle, we'll always lag behind the USA.
No Venture Capitalist except the most self satisfied is content with the level of support given to the leaders of their portfolio companies. History has dictated that CEOs are brought into the business to run it, yet at the first sign of a market not being ready or some product delivery hold ups or that big deal just not happening, they are ejected along with their knowledge capital and all the good reasons they were hired in the first place - in other words firing the CEO is the only tool in the box for assisting with under performance...and it rarely helps.
Now there is a growing number of VCs who recognise that coaching the CEO through specific classes in various discilpines along with sharing experiences with other CEOs in a structured training environment really works. The European Leadership Programme (ELP) was created for this very purpose and has so far received vocal support from many VCs including the giant 3i.
ELP has a growing membership of exceptionally able and open minded CEOs who are finding that their attendance at 4 days a year of training really helps raise the game. ELP tackles all the challenging subjects like tuning your business for an exit, managing hyper growth with limited capital, funding mechanisms and the list goes on. Each member is polled on line for their areas of concern helping the organisers design the most relevant sessions and bring in the right experts for each day's session.
ELP membership costs are in the 'no brainer' category and are a must for the CEO who wishes to maximise his/her performance
Links:
yes
Support is a very small word with wide implications. Support encompasses everything from loyalty, money, expertise, sales leads, contact networks, recruitment capabilities, bankers, pragmatic advicetc.
My experience as a London based technology company has been strong on loyalty to founders, good at attracting non-technology board members. Generally average to weak at all other tasks. Is it realistic to expect anything more?
Impossible to answer as there are too many unknowns. Some VC:s are very good and very much attuned to the needs of the people and companies they are investing in. Others are completely hands-off which, for some, are an ideal situation. Some are complete micro-managers, they tend to have a history of failed investments and/or an internal leadership problem.
To a certain extent support, resources and time echoes the old time, quality and price thing. You can choose any two but you can't have them all. What I mean by that is that you can get a substantial investment from a hands-off investor that will supply you with resources (or at least the resources to get resources so to speak) and implicitly time. They will however not give you the support. And so on. The worst ones will only supply one of the above and they should be avoided like the plague.
