Wading into the Venture Stream

It was all action in the venture stream this afternoon at Super Return. A particularly impressive line-up included Simon Cook of DFJ Esprit, Kate Bingham of SV Life Sciences, Helmut Schuhsler of TVM Capital, Patrick Lee of Advent Venture Partners — with Anne Glover of Amadeus moderating.

What started out as a fairly run of the mill, albeit interesting, chat about why European venture was outshone by its US counterpart – it’s as good if not better in some areas, it’s just that Europeans aren’t good at making it public was the conclusion – ended with a heated debate concerning specialisation versus generalisation.

It’s an established topic but one whose problems and issues were bought to life mainly due to an engaging panel and, in particular, the contrarian views of Peter Flynn, a London-headquartered placement agent. He argued, forcefully, that what LPs wanted was not specialisation, which is what the panel consensus had been, but rather generalisation. LPs wanted to invest in European venture, he argued, but the range wasn’t there because so many VCs were specialised in life sciences or technology. “Fund of funds struggle to get their money away because there aren’t enough VCs offering a range,” he said.

The panel, and some of the audience, were quick to argue the opposite. Schuhsler said that whilst this was true seven or eight years ago, it wasn’t the case today. What was wanted today was specialist teams who are experts in their fields, people who know their sectors inside out.

The point was made that specialisation can only occur in a market which has reached a critical mass – in emerging venture markets, generalisation is the most sensible way to start, and only after this critical mass has been reached can firms then begin setting up specialised teams.

What do peHub readers think? Is specialisation for venture firms the only game in town, or is there a need for VCs to be generalist?

Also, bearing in the mind that the bulk of peHUB readers are based in the US (I´m assuming Dan, feel free to prove me wrong!), there was one other point which I’d like to bring up and see the reaction. Simon Cook said that Silicon Valley is becoming largely irrelevant, and pointed to Apple using European technology for all of the iPhone. The response to this from one audience member was that this just highlighted Europe’s problem – Europe can produce good tech but it takes the US to make them into companies.