Is the UK's high-tech venture capital bubble going to burst? This is the question techTrader asked Malcolm Holt, managing director of new site matchco.co.uk. Launched this month, the site intends to act as a sort of dating agency for online businesses in order to provide access to capital for entrepreneurs in the high-tech sector. The company, which has the backing of a number of blue chip business partners, believes it can more than treble the funding success of e-entrepreneurs in "weeks not months". Malcolm Holt has a clear vision for the path that the e-commerce market is going to take: "I'm sure that there are going to be some casualties along the way, but e-commerce is going to move along at a fast pace. An increasing proportion of the population is now getting access to the Internet, and once it takes off completely, it is going to be easier to sit at your desk than go out to the shops."
How would you describe the e-commerce start-up situation in the UK at the moment?
There is a lot of interest and talk about the current state of the e-commerce market in the UK, but the situation is becoming chaotic. We are four years behind the US, and so the process for Internet start-ups is not in a position to move logically forward.
Where is the UK now in terms of fostering Internet start-ups?
At present, only one to three per cent of all e-business proposals are successful. In the US, the success rate is in double figures. There are, however, over 1,000 proposals a month looking for funding, whereas investment companies will only handle 20 start-ups a year. The UK investment community has a tendency to look for established networks, by considering what university the entrepreneur attended and what degree they obtained. UK start-ups are, therefore, looking for a format in which to present their proposals, so that the men in grey suits can understand what they're talking about.
What kind of people do you hope will use this system? Is it your intention to draw unconventional ideas out of people?
The research that we've carried out shows that there is a significant communication gap between someone who can't talk the business language and those with a bag of money. There's no general case or specific group of people that we are hoping to target. A random sample did, however, suggest that there is a latent interest in e-commerce within the senior management sector. Those who are between the ages of 28 to 35 see the Ben Ways making pots of money, but they don't possess a full set of skills that will enable them to set up a business. It is our intention to secure their new idea, and foster it into a concrete business plan, putting some formulation into the process.
It's not necessarily our prime intention to target those with unconventional ideas. The general priorities in the UK fall under the categories of who is proposing the idea; what is their credibility; what is the quality of the idea and how complete is the format of their plan. In the US, the priorities are admittedly more angled towards the idea and the person initiating the proposal.
How much venture capital does the typical e-entrepreneur require?
The average start-up will require £1m to £2m pounds of initial funding. Part of the problem with funding sources is that because they are used to the bricks and mortar investment, they are struggling in knowing how to look economically at the smaller two million deals.
Is there competition between UK and US venture capitalists for the UK market?
The (UK) investment community is going to be driven to e-commerce, or they will have their market taken away from them. The US has now gone through two cycles of IPOs, and they are looking to come across to the UK and make investments in a more immature market. The venture capitalists are running the market at the moment, but the US is beginning to see a reversal of this trend. I think that in future, the opportunities will start to take more of an influence.
Startup Spotlight is a new weekly feature on ZDNet UK News and ZDNet techTrader, featuring the bright sparks of the UK's high-tech startup industry. For more of the faces behind the news, see the Startup Spotlight archive.