CORPORATE VENTURING HOTS UP


19-02-2001

Survival pressures drive trend towards earlier stage investing



Corporate Venturing - the means by which large corporations invest in

fledgling companies, particularly in the technology and new media arenas - is hotting up in Europe.

According to data assembled by FirstStage Capital (FSC) at least 72 new funds have started in Europe since June 2000 with a spending power of around EUR 4,868million ($4.4 billion). This is a strong indication that the growth experienced in the USA, from $392 million in 1996 to $18 billion in 2000, will be emulated in Europe, despite the market's present cautious sentiment.



Chairing a packed seminar today on Corporate Venturing, Friend or Foe,

organised by FirstStage Capital and CMS Cameron McKenna, FSC ceo Jason

Purcell highlighted the delicate balance between investing to get access to new technology early and realising a financial return. He referred to major organisations such as Bertelsmann, Lloyds TSB, Orange and Nokia having set up new corporate venturing funds in the last six months.



According to the speakers' panel - Christian Hackett, Enron Broadband

Investments, Dr. Simon Murdoch, ex-European VP of Amazon.com and founder, Episode 1 Partners, Pierre Suhrcke, director, Deutsche Bank eVentures and Norman Fiore, partner, Reuters Greenhouse Fund - the climate is right for venture capitalists and corporate venturers to work together as friends rather than foes. The panel agreed that the potential financial rewards for both were high, with productivity and maintaining competitiveness added bonuses for the parent corporations.



Questions to the panel from a mixed venture capitalist and corporate

venturers audience reveal that the underlying issues of oscillating

valuations, remuneration, staying power and timing are common to all venture capital transactions. The key difference is in motivation. Corporate venturers start with the need to do strategic investment in cutting edge technology which their own organisations can then access.



Concludes Jason Purcell: 'Corporate venturing offers benefits in allowing traditional companies to keep pace with fast changing technology and exploit the potential returns to be gained. While some cynics may say the corporates are jumping on the VC bandwagon having seen record returns we believe they are here to stay as a force in European venture capital.'



Sources include Tornado Insider, Venture Economics and the European

Commission.



FirstStage Capital (www.firststagecapital.com) is a corporate finance house that specialises in securing funding for start-up and developing technology businesses. We work closely with entrepreneurs advising on business strategy, valuation and the pitch to investors. We help to design appropriate fund raising strategies and identify the best funding partners, managing the process through to completion.



A single web location (www.firststagecapital.com) acts as a resource for investors, entrepreneurs and advisors. Entrepreneurs can find advice and apply online, investors can easily access pre-screened companies that match their investment criteria in the form of professional investment reports and advisors can source new business opportunities. Content is personalised to the interests of our customers and kept constantly updated. In forum rooms, professional advisors answer questions on topical financial, legal, marketing and technology issues.



Further information: Gail Sheridan/Catherine Griffiths Key Communications 020 7580 0222

gails@keycommunications.co.uk / catherineg@keycommunications.co.uk

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