Watching up with Julie Meyer is one thing, keeping up is quite another. The fast-talking American is so full of ideas and energy she reflects the equally dynamic online and digital world she works in. During our 45 minute meeting we cover everything from Martin Luther to the recession and the future of the 21st century. “Do we have enough time?” she asks the start of the interview. I tell her we do, I am certainly wrong.
Meyer’s business, Ariadne Capital, is, by its most mundane description, an advisory, investment and networking business. Meyer will refer to it also as a ‘marketing machine’, ‘a revenue centre’ and place where ‘entrepreneurs back entrepreneurs’. Its clients include some of the hottest new properties in the digital, online and media spaces. While its 50 or so founding shareholders are drawn from the best of the UK and European digital world. And, in the middle there’s Meyer and her team joining up the dots. “My strategy with entrepreneurs is to become their confidant and for them never to doubt that I am on their side. Start-ups are such a hot kitchen, you have to be the steady ship that they can lean on.”
So, in the teeth of the worst recession and financial crisis in years, are the deals still getting done? Apparently so, Ariadne has completed five fundraisings since December, sees about 100 business plans per month and is still hiring staff. Meyer also scoffs at the notion that ‘nobody is getting funded’. “When people say nobody is getting funded, I think they might not be getting funded by the VC community, but there’s a lot of private capital out there; there’s a lot of family offices and entrepreneurs that have made money, and they are looking for opportunities to channel into their money and expertise.”
This is where Ariadne fits in, working with the start-ups and emerging businesses, helping entrepreneurs overcome their funding problems and build managerial capital through its network. Meyer describes business development in five main stages: concept, product, validation, scalability and sustainability and/or exit. In order to effectively gauge a company’s valuation, she spots where the entrepreneur is in this cycle, looks at comparable fundraisings and gives the owner-manager the hard truth. “A lot of entrepreneurs have unrealistic expectations about valuations. But if you have them on your side and they trust you, you can say ‘lets look at the deals done for companies at your stage of development, you’re not worth £10m today, you’re worth £3m, so lets get a deal done’.”
Ideas V Money
The UK is no longer home to heavy manufacturing and huge nationalised or state-backed businesses. Its economic future depends on the efforts and ideas of entrepreneurs and small businesses. Meyer believes that on this front we have a lot to offer and sees the next century as a period of ‘mass entrepreneurship’. But she is less than impressed by both statesman and institutional investors, who still don’t seem to have grasped what this really means. “There are lots of great entrepreneurs in this country, but the funding of entrepreneurship has not kept pace with it,” she says.
The venture capital community needs to revise how they relate to entrepreneurs and to want to create more world-beaters. Trust between the VCs and entrepreneurs needs to be improved and the former need to look at owner-managers in a more positive light. “Not everybody is a Charles Dunstone (founder of Carphone Warehouse), but there’s more Charles Dunstones in the market than the VC community admits.
“I am amazed by the amount of successful entrepreneurs, who have made money and want their next idea to be hit right out of the ballpark, who say, ‘you know what I don’t want anything to do with the VC community’.”
Ideas and innovation are essential and always have been, but too much emphasis is placed on the money, she argues. This leads to the two groups ‘fighting for control of the bus’ there’s also many cases of companies being over-capitalised which makes profitable exits unrealistic: “It comes down to the philosophy of the investor. Who’s the hero of the story? When I speak to the investors about who they think are the important ones in the equation they say that ‘we are the ones bringing the money’. But if you look at history it shows that capital follows ideas, it always has and always will.”
Getting to market
So what makes a great idea or business, Meyers draws from history to argue the following: “It isn’t the best idea or product that wins the day but the best idea/product with the best distribution. Martin Luther had a radical idea challenging the Catholic Church, but without Gutenberg he would have been a mere footnote of history.”
What is needed
Start-ups are ‘front loaded’ needing lots of capital, ideas and talent right at the start to take them out to market. For new technology-based companies this is all the harder as development costs can be high and consumers still have to learn about them before they will buy. Ariadne offers to find answers to all of these problems, as well as talking up its portfolio companies. As a permanent resident in the UK, Meyer knows all too well about our British reserve, which she admires but admits doesn’t help to get a company’s name out there. Here the unashamedly American ‘marketing machine’ kicks in, as she is only too happy to sing the praises of her portfolio companies. But businesses looking to get adopted by the corporations need more than press coverage. B2Bs need think about the Cs too. The ‘consumerisation of technology’ was a highly significant development of the 20th century and entrepreneurs need to recognise that. Meyer cites SpinVox, the voice to text company, as a great example of a company that used consumer take-up to convince the Blue Chips that it was worth dealing with. “They got 150,000 people signed-up through a great deal with the Carphone Warehouse, and then they went to the big telecommunications companies.”
Meyer speaks highly of SpinVox’s founder Christina Domecq a fellow woman in business that she wants to succeed and believes is great for female entrepreneurship. She is also perplexed about some of the recent negative press coverage that the company has received and asserts that the business will prove its critics wrong. “Its revenues are growing and it has a great IP portfolio. And when you look at her staff they are incredibly devoted to her, she’s create a corporate culture that I have rarely seen. The staff believe they are creating a billion pound company.”
Another company she mentions more than once is Monitise, the AIM-listed mobile banking business. “I really think that Monitise is going to go down as one of the most impressive companies in history. Its share price is completely bucking the trend.”
Indeed, after a rough year on the markets its share price is growing again which validates is decision to hold firm and stay on AIM, while the financial world regained its composure. Consumer finance is, in fact, an area which Meyer believes Britain is good at and other growing hopefuls, such as Wonga and Zopa are also worth a look. The Meyer-powered marketing machine is working for its clients, although not everyone she mentions is a client, such as Thunderhead led by Glen Manchester. Meyer just seems excited about hot new companies in general.
Innovation and technology has ushered in a new paradigm for business, and Meyer is positive that her portfolio businesses will be among those that replace the ailing old industries. Local media is one likely candidate for the cull. However, Meyer is unsentimental about these changes. “
You have dominant newspaper groups and directory services which aren’t particularly interested in making it work for everybody, they just want to make it work for them. People want to spend money locally, but they have failed to animate local businesses to advertise online, even in 2009.”
It’s a similar story for the record industry; it failed to adapt and to listen to what consumers were telling them. But now new companies in the new media world are taking their place and are getting funded. Look at for example BView, an interactive review of businesses complete with credit scoring, or Slice the Pie, where fans can invest in musicians.
There seems to be something so much more democratic about the companies she champions, compared to the dominant players of the 20th century. It isn’t just about them making money, but about the consumer getting a return too. With this in mind, you start to get a flavour of what she is envisaging when talks about a future of mass entrepreneurship. A future where we are all able to get the information we need, invest in great ideas and depend on ourselves above all.
This interview was previously run in Angels, sister publication to Business Matters. As a Business Matters subscriber you can subscribe for free HERE