Downturn provides good opportunities

09 November 2008  By Emma Kennedy

Julie Meyer knows a thing or two about investment. She is one of the co-founders of First Tuesday, a networking event that brought technology start-ups and investors together during the dotcom era.

She is also founder and chief executive of London-based investment firm Ariadne Capital. Tomorrow evening, she will address a networking event hosted by the Dublin Institute of Technology’s innovation and technology transfer office, Hothouse. At the event, 30 graduate entrepreneurs will showcase their technology businesses.

For Meyer, her visit to Dublin could represent an investment opportunity. In fact, any trip could. ‘‘I am always on the lookout," she said. To date, Ariadne Capital, which she set up in August 2000, has not made any investments in Irish companies. But that could change as Meyer said she intended to meet a couple of Irish entrepreneurs during her short trip to Dublin this week.

Ariadne’s main focus is on companies in sectors such as digital media, music, entertainment, communications and consumer financial services.

‘‘Right now, we are an investment and advisory business that takes equity stakes." The company is backed by 50 global entrepreneurs.

‘‘We syndicate the investments through the various investor groups that we go through. It is not a fund of X amount that we have invested, but an amount of capital that gets invested in our companies every year."

At the moment, Ariadne holds equity stakes in 20 companies; in 2008 alone, some »80 million (€98 million) has gone into Ariadne firms. The scale of the firm’s investment looks set to grow, with Meyer saying that a large investment group had approached the firm recently about putting together an investment fund.

According to Meyer, current market conditions represent a tremendous opportunity for entrepreneurs. ‘‘When the market downturns, that is when the real entrepreneurs get cooking, and it separates the men from the boys and the women from the girls," she said.

‘‘This is going to be a period of innovation, and there are a lot of things that go really in favour of the entrepreneur, in terms of building businesses in a downturn. You have to be committed. The hangers-on go elsewhere."

She also highlighted the lower cost-base faced by someone starting a business at the moment.

‘‘Technology is cheap right now, so start-ups are not going to be hampered by the cost of technology, and they are going to be able to pay people less. Overall, you are really in a rather disciplined environment and are able to prove your value proposition. You can tell whether people buy what you sell," she said.

Some investors, she said, focus too much on the product. For her, the main thing is always the person behind the product. ‘‘There are two churches. To me it is really clear. It is all about the entrepreneurs. You are never going to win the ‘is this the best technology?’ debate - but can you work with the best entrepreneurs? Yes, you can. You can set your bar very high."

Setting the bar high has always been part of her vocabulary. As one of the founders of First Tuesday, Meyer set off an explosion of networking during the dotcom era and changed the way that technology firms interacted with investors. The firm was sold for US$50 million in 2000 and she used her share of the proceeds to fund the establishment of Ariadne.

First Tuesday has lived on in a different guise - recently Meyer spoke at the network’s ten-year anniversary celebration in London. While she praised the people behind the network now, part of her still thinks she did not get to exploit First Tuesday’s initial potential fully. ‘‘My point of view was that there was a bigger play," she said.

The organisation began life in a London bar in October 1998. ‘‘After the first meeting, there was immediately a sense that we had to do it again. We did a lot of very structured matchmaking events, where we were taking two per cent of the deals that got funded. We all saw the opportunity very early."

However, friction between the founders made it difficult, with Meyer saying there were ‘‘differences in terms of our go-to-market strategy’’.

Meyer already has her eye on the next challenge, but is reluctant to give away any details just yet. Suffice it to say it won’t be a small plan.

‘‘I think I have a natural capability of thinking big, wherever that comes from. I am interested in the things that are game-changers and I am interested in working with global leaders. I think I do have a kind of fearlessness. That’s something I can share with the entrepreneurs I work with when they start to get afraid."