The quality of tech-crash scar surgery higher in mainland Europe?
I went up to Dublin yesterday to meet with a director of one of the big investment and finance houses financial services companies (not a VC). We had a deeply interesting albeit very short meeting and I came out of it a bit depressed about the state of tech investment in general in Ireland.
I had asked for the meeting to see if there was any interest from them in investing in LouderVoice with a particular focus on their private clients for whom they do wealth management. I did my little pitch and the immediate response was that they were not interested at all in any kind of investment. This was no problem, I’ve been around long enough not to take such things personally.
I decided to dig a little deeper (considering we were now less than ten minutes into the conversation). It turns out that not only do they not get involved in early-stage tech investment but they have made zero tech investments since the crash! Their clients “still have the scars from the last time”. It also turns out that “early stage” in their view was anything prior to exit/IPO.
The message I got was that this was a general view not just limited to themselves. Is it really that bad? I find it hard to believe that the entire Irish investment scene is that lacking in sophistication. Is everyone just doing shooting-fish-in-a-barrel property investment with no interest in something a little bit more exciting? I’ve already started talking to UK and European based VCs who appear far more amenable to at least looking at a web-based opportunity.
The person I talked to made one point that I had not heard before and it is an important one. Not only were early-stage investors hurt by all of the companies that crashed, they were also not able to do well out of the ones who survived. The reason for that was the huge levels of dilution that were forced by the VCs in later rounds. I believe this kind of behaviour is less common now but I can understand why someone would be wary of getting in too early with such a history.
Despite getting burned quite badly during the crash, my scars are healing nicely and I can see the wealth of opportunity in tech. In fact, if I had spare funds, I know of at least two Irish start-ups that I would invest in right now apart from LouderVoice. I’m convinced one of them will become a major global player.
I don’t know what the solution is to getting Irish investors back in the tech saddle. Is it the investors or the investment houses that are scared? i.e. is access the issue? Would a few more Stockbytes do the trick? An Irish YouTube (FeadánTusa)? LouderVoice launching in Japan in 2008?
Thoughts anyone?
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