Posted By Clod on May 6, 2011
The complexities and nuances of assembling deals with international partners can seem daunting to even the most well-heeled businesspeople, so many U.S.-based venture capitalists are lining up foreign partners to smooth out the cross-cultural wrinkles.
“Europeans take longer to build relations,”, co-founder of Stockholm-based accesspaper and a longtime cross-border businessman who has held executive jobs with companies both in Europe and the United States, including Weyerhaeuser in Tacoma, Wash. “There is an element of conservatism in Europe, which means you need to work on a relationship longer or deeper to get something.”
Helga St. Blaize, co-founder of a Cardiff, Wales-based online information technology marketplace called ace-quote.com, bemoans the Euro way of doing business. In the Net Economy, “you can’t do things the normal English way and take 1,000 lunches before you make a deal.”
One venture firm that is finding partners to help blend American freneticism for quick ramp-up with other cultural sensibilities is Silicon Valley-based VC firm Draper Fisher Jurvetson. Draper will work through what partner Tim Draper calls “network affiliates” in Germany and Israel. Meanwhile, Cross Atlantic Capital Partners has purchased 51 percent of Dublin-based VC Crucible, and in the United Kingdom has teamed with London-based VC firm Top Technology to invest in Brainspark, a British idealab!-style incubator of Internet companies. Hummer Winblad partner Dan Beldy also says he is on the lookout for European partners who can help him find qualified staff for Hummer Winblad-backed companies.
Given the importance of relationships in the Old Country, some U.S. venture firms are staffing their own offices with European nationals to help forge alliances and understand marketplace idiosyncrasies. Geocapital has dabbled in European investments since 1991, dispatching U.S. partners on trips across the Atlantic. But with $150 million now tagged for European investing, including $75 million from the Geocapital Eurofund and $75 million from Geocapital’s latest U.S.-based fund, Geocapital V, the firm’s roster includes a mix of seven American, continental European, and British partners, according to London-based partner Nic Humphries, who is British.
“People underestimate how different the countries are in culture and infrastructure,” says GE eFund director Laurel Bowden, who recently turned down a U.K.-based online financial services company because its plans for pan-European expansion were unconvincing.
“The French do business differently from the Germans who do business differently from the British and so on,” agrees accesspaper’s Palm. “Europe has sovereign national states, and people are keeping their cultures as unique as they can.”
A few days in Europe bears out his thoughts. Certainly, a U.S. venture capitalist looking for partner firms could well find French ways perplexing. One French angel investor, Yannig Gourmelon, had no sooner finished presenting to a group of financiers at a (see p178) recent London seminar sponsored by French financial relations firm nshow.com when he deflected a follow-up question by explaining, “The French don’t like to talk about money.”