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.