When Michael Birch and Brent Hoberman announced their PROFounders Capital in April “to fill the gap between angel and traditional venture funding in the digital media sector”, some of us raised an eyebrow…
“Funding gap?” Really? In the last two years, Europe’s top tech VC houses have opened new funds totalling $2.37 billion – and PROFounders have since been joined by Ariadne CEO Julie Meyer’s £20 million new startup fund, Beringea’s £30 million digital ventures fund and Channel 4’s £50 million 4iP.
So is there really a venture crunch… ?
“There’s absolutely a funding gap,” Hoberman told paidContent:UK during a debate at the Association of Online Publishers summit in London on Wednesday. “VCs don’t like risk. That should not be the case.
“It’s very easy to get five VCs banging at your door wanting to give you $5 million – if you want half a million, it’s very hard.”
PROFounders, which also numbers Pipex creator Peter Dubens and LongAcre founder Jonathan Goodwin, has so far funded Twitter app Tweetdeck. More are in the pipeline and Hoberman said he’s trying to discourage cohorts from seeking the “perfect” investment – a nod to the greater certainty on business models that many of the larger VC houses are now seeking in the downturn. “Five hundred entrepreneurs approached us after we got one FT article.”
Speaking on the same panel, Meyer (who is also a Dragon’s Den investor), told paidContent:UK: “There’s a whole new group. The piece that has lagged has been the funding of entrepreneurship, which is why we (in Britain) haven’t had as many global leaders.
“Early-stage investment venture capital is becoming two categories – all that money is late-to-early from investors that say ‘come back to us when you have a million in revenue’). By the time (startups) get to million in revenue, a lot of them will say ‘coming back to you is the last thing in the world I’ll be doing.