Profile: Ronald Cohen More action than Talk

Peter Koenig meets a venture capitalist who does big deals for larger-than-life clients

AS KELVIN MACKENZIE, the journalist turned entrepreneur, wisecracks about taking over Talk Radio, Ronald Cohen, his corporate adviser, might well have quoted another comedian. "It took me 25 years to become an overnight success," the late Henny Youngman quipped, and the one-liner from the king of New York's one-liners neatly sums up Cohen's career.

Aside from advising MacKenzie's TalkCo consortium, Cohen's firm, Apax Partners, recently made headlines on another radio deal - providing capital for Chris Evans and Ginger Productions' acquisition of Virgin Radio. Next month Apax branches out from its traditional turf, venture capital, into dealing in small company shares. Meanwhile, Cohen has become one of Tony Blair's businessmen advisers. He chairs two Department of Trade and Industry committees aimed at improving UK competitiveness and is helping out the New Labour policy wonks working on creating a UK equivalent of California's Silicon Valley.

"In the Eighties, people thought we were on a hiding to nothing," says Cohen speaking of Apax in particular, but also the venture capital industry in general. Now, he says, the publicity declaring that he has arrived is nothing more than a prelude for the news to come. "Circumstances are changing in favour of venture capital and the entrepreneur," Cohen says. "The best is yet to come for Apax, the venture capital industry, and entrepreneurs."

Before he became a semi-public figure this year, insiders in the City knew Cohen because of Apax's gradually lengthening list of success stories. Cohen and his colleagues invested early in Computacenter, the UK computer services company; Esprit, the independent phone company; Waterstone's bookshops; and PPL Therapeutics, the Dolly the cloned sheep company. They have reaped the rewards as the equity in these companies has been sold to the public.

Now, however, the financial and business communities are taking an interest in Apax and venture capital. Apax is one of about 100 venture capital firms in the UK. These have invested pounds 23bn in UK start-ups, development propositions and management buyouts since the founding of the British Venture Capital Association in 1983.

This is a substantial sum compared to the pounds 6.5bn capitalisation of AIM, the small company stock market, even if it remains a drop in the ocean compared with the pounds 1,440.5bn invested in UK companies through the main London Stock Exchange. Gradually, the distrust of venture capital firms by the City's big fund managers is being turned round.

In the early Eighties, pension funds and insurance companies were given the hard sell by young and often brash venture capital firms. Take big risks, City fund managers were told. Earn big rewards. So City fund managers took big risks and earned mediocre or poor returns. Once burnt they were twice shy.

As the six-year-old Nineties mini-boom gathered pace, however, and as stock markets round the world rallied on the strength of hi-tech leaders, the City's painful memories have given way to a growing sense that venture capital is a sensible risk/reward play.

In 1997, venture capital investment in the UK rose 29 per cent to a record pounds 4.2bn. This money went into 1,200 new and developing businesses and to managers buying out their divisions from former employers. "The money going into venture capital this year is even higher," says Charlotte Morrison, spokeswoman for the British Venture Capital Association.

The gains since the early Eighties, meanwhile, if less than sensational, have been respectable. Over one year, venture capital funds returned 21 per cent, according to the WM company; over five years 29.3 per cent; over 10 years 14.6 per cent.

The hot stock market last year took some of the wind out of UK venture capitalists' sails. Both the FT-SE All-Share and FT-SE 100 indices outperformed UK venture capital funds. But the best of the Eighties/Nineties bull market may be behind us, Cohen suggests with a wary smile. The prospect of a bear market, combined with changes in Europe's financial regime, combined with New Labour's championship of entrepreneurial activity, all make it timely, according to Cohen, to review where venture capital has come from in the UK and where it is going - even more than the headlines about him and Kelvin MacKenzie. Cohen founded Apax Partners in 1972 at the age of 26, after graduating from Oxford and Harvard Business School and doing stints as a management consultant at McKinsey & Co in the UK and Italy. Apax was associated from the start with Alan Patricoff, the New York-based venture capitalist who gained fame in the US when he helped finance the fledgling New York magazine, home to such writers as Jimmy Breslin and Tom Wolfe. "From the start our idea was to be international," Cohen says.

He and Patricoff developed associations with likeminded venture capitalists in Paris, Munich, Zurich and Tel Aviv. Each company in each city remains separate and privately held, but the venture capitalists hold shares in each others' companies and, Cohen says, "we operate as one".

Making it through the Seventies, during which the firm was as invisible as its humblest start-up, and the Eighties, during which it survived the shakeout in its industry, Apax has grown steadily in the Nineties. Today it and its associated firms have $3.5bn under management worldwide - two thirds in Europe. Apax has 300 European staff. Five years ago, pounds 500,000 was a large stake for the firm. Today pounds 10m is.

The headlines in venture capital are being made in management buyouts. Think not only of Talk and Virgin Radio, but of Cinven's backing for the recent management buyout of IPC's consumer magazine division. "The buyout game is producing good returns," says Ian Armitage, the head of Mercury Asset Management's private equity group.

But Apax is concentrating on early-stage investments as well as buyouts. It organises itself not by the kind of venture capital it invests, but by the fields into which the money goes. Apax focuses on information technology, telecoms, biotech and speciality retailing.

Cohen declines to discuss the performance of Apax. But the latest figures at Companies House show that in 1996 Apax Partners Ventures made a pounds 233,000 profit on sales of pounds 11m. Apax Partners is one of four UK divisions of Cohen's firm. A guestimate would be that Apax UK is now generating annual sales of about pounds 50m. Profits would be considerable but, with no public shareholders to please, understated.

If Cohen is right, however, and venture capital is entering a golden age in the UK and Europe, the figures his firm generates over the next five years could be in for the kind of growth spurt his best fledgling companies have achieved.

Cohen was one of the moving spirits behind the establishment of Easdaq last year. Easdaq is the over-the-counter pan-European counterpart of Nasdaq in the US, the stock market exchange home to Microsoft, Cisco Systems, and other such wonders. Cohen believes that the establishment of Easdaq will make it easier for successful start-up companies to go public, thus making it easier for venture capitalists to realise gains in their investments. He also thinks that Easdaq, with its American ways, will force the big tradition-bound European stock exchanges to modernise.

"One of the big problems at the moment is that it is not part of the European culture for companies to go public until they are making a profit. This is not the case in the US.

"Traditionally, European stock exchanges have sought to position themselves as safe for widows and orphans. We think investors should be able to decide on the risks of a hi-tech company for themselves."

His views about business in the UK are equally unconventional. Cohen rejects the notion that Britain and the entrepreneurial spirit are cultural misfits. While accepting that public attitudes toward entrepreneurs striking it rich after taking big risks remain ambivalent, he expresses confidence that Blair will introduce policies over the lifetime of his government to encourage entrepreneurial risk-taking. "There is not necessarily a big risk involved in being an executive at a privatised utility," he says. "But there should be big rewards for men who are willing to go out and start something."

That, in a phrase, is what Cohen himself has done. He may not be as famous as the other big backer to Kelvin MacKenzie and his bid for Talk Radio. But Rupert Murdoch may be yesterday's man, while the head of Apax is tomorrow's.

Arts and Entertainment
Banksy's 'The Girl with the Pierced Eardrum' in Bristol
art'Girl with the Pierced Eardrum' followed hoax reports artist had been arrested and unveiled
News
peopleJust weeks after he created dress for Alamuddin-Clooney wedding
Life and Style
tech

Sales of the tablet are set to fall again, say analysts

Life and Style
A street vendor in Mexico City sells Dorilocos, which are topped with carrot, jimaca, cucumber, peanuts, pork rinds, spices and hot sauce
food + drink

Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets

PROMOTED VIDEO
Arts and Entertainment
George Lucas poses with a group of Star Wars-inspired Disney characters at Disney's Hollywood Studios in 2010
films

George Lucas criticises the major Hollywood film studios

Sport
football West Brom vs Man Utd match report: Blind grabs point, but away form a problem for Van Gaal
Arts and Entertainment
Bloom Time: Mira Sorvino
tvMira Sorvino on leaving movie roles for 'The Intruders'
Arts and Entertainment
Gotham is coming to UK shores this autumn
tvGotham, episode 2, review
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
News
First woman: Valentina Tereshkova
peopleNASA guinea pig Kate Greene thinks it might fly
Voices
Chris Grayling, Justice Secretary: 'There are pressures which we are facing but there is not a crisis'
voices

Does Chris Grayling realise what a vague concept he is dealing with?

Life and Style
The charity Sands reports that 11 babies are stillborn everyday in the UK
lifeEleven babies are stillborn every day in the UK, yet no one speaks about this silent tragedy
News
Blackpool is expected to become one of the first places to introduce the Government’s controversial new Public Space Protection Orders (PSPOs)
news

Parties threaten resort's image as a family destination

Life and Style
Northern soul mecca the Wigan Casino
fashionGone are the punks, casuals, new romantics, ravers, skaters, crusties. Now all kids look the same
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

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Project Coordinator - 12 month contract

£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Salisbury ranked seventh in world’s best tourist cities

The city is home to one of the four surviving copies of the Magna Carta, along with the world’s oldest mechanical clock
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album