Inside Business: Nothing ventured for IT

Hi-tech start-ups say they're starved of backing. This may be about to change

THE LATEST in a series of "Venture Market Europe" conferences was held in London last week. The series aims to overcome the funding shortfall for the European information technology industry by linking venture capitalists with new-start, hi-tech businesses seeking finance.

Inspiration for the idea came from Red Herring, an American magazine published in hard copy and on the world wide web (www.redherring.com), which provides information on technological development and hints on how to raise money.

Recognising the problems many new IT businesses have in raising funds, four years ago the magazine began organising conferences in the US where leading venture capitalists could listen to pitches from high technology enterprises. That idea was exported to Europe two years ago.

Rafe Needleman, editorial director of Red Herring, believes these conferences have helped overcome the comparative reluctance of European venture capitalists to invest in high technology compared with their American counterparts.

Last week's conference was well attended, attracting 400 venture capitalists, made up of a mix of investment bankers, fund managers and representatives of large high-technology corporations, including Microsoft and Fujitsu, that are looking to invest in small new-start businesses as part of their research and development programmes. Roger Needham, Microsoft's head of research in the UK, was among the speakers, and 20-minute pitches were made by 40 young IT businesses from Europe and Israel.

The conference was sponsored by Arthur Andersen, the accountants. Jeremy Hall-Smith, the firm's corporate finance group manager, says the sponsorship has gained the firm access to an important group of potential customers. He said: "Our involvement stems from our global technology practice. We want to meet these companies just before they take off, so we can offer corporate finance advice and tax consultancy. They will have to be big in the United States before they can go to Nasdaq [the American stock exchange specialising in new technologies], and we can help them get there."

Mr Hall-Smith says that new-start businesses often believe that their challenge is simply to raise start-up money, overlooking the importance of finding the investor whose approach matches their own. Some are very hands-on, and styles can clash.

But Mr Hall-Smith believes that the venture capital market in the UK will now support good young IT businesses. "There are a number of switched- on venture capitalists here who are capable of driving companies forward," says Mr Hall-Smith. "It is, though, much more important for them to get comfortable with management and technology here."

This view is not shared, though, by all new-start businesses. Orchestream, a young IT firm, gave one of the most impressive presentations but has been struggling to raise finance in Europe for the last two years despite having a heavyweight board of experienced IT professionals. Its business proposal - to develop electronic traffic priority systems, ensuring that market information is received quickly, but that e-mail gossip is controlled - has an obvious market demand. Yet initial funding has come from people in the record industry and others outside the recognised venture capital sector.

Charles Muirhead, chief executive of Orchestream, believes more needs to be done if venture capitalists in the UK are going to support new IT businesses. He says many investors still focus on traditional manufacturing and distribution processes, failing to recognise the realities of new industrial sectors and how they are organised. This view was backed by the Computing Services and Software Association, the representative body of Britain's IT sector.

However, the association argues that venture capitalists here are improving, and says that the Government's decision in March to finance the Software Business Network to help it attract start-up capital for IT businesses was an important step.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
Fans take a selfie with Ed Miliband in Kempston, near Bedford, on Tuesday
election 2015
Extras
indybest
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power