Cook’s Crusade

Esprit’s Simon Cook has been hard at work making the case to American investors that Europe’s venture capital future – and present – is full of unheralded success. Dave Keating reports.

Simon Cook is a man with a mission these days. A founding partner of Cambridge and London-based Esprit Capital Partners, Cook has been meeting with investors in the US and giving them a presentation detailing the unheralded strength of the European venture capital scene.

Simon Cook

Among some of the more interesting statistics Cook has collected for his presentation is the fact that of the top 250 technology firms in the world, the US and Japan’s share have been decreasing, while Europe’s has been increasing. In 2000, the US held 153 of these top tech firms, but by 2005 the country held 116, according to OECD. During the same period, the number of such companies in the EU-15 expanded from 32 to 42. Cook argues that while the difference between the US and Europe shares is still large, the fact that one number is falling while the other is increasing suggests Europe may not have long to go to catch up.

Cook argues that Europe’s big promise lies in the technology sector, and he’s been using one of the most ubiquitous products in the world today as an example. Part of his presentation involves a dissection of the iPod, showing that a large proportion of the product comes from products or technologies made or developed in Europe. The parts, from such companies as PortalPlayer and Philips, make up six of the iPod’s 15 components, according to Jeffries & Co. and Cook’s own research.

So why haven’t LPs seen big returns yet from these emerging technology companies? Cook argues that there has been some considerable success but it hasn’t been shouted from the rooftops. He points out that exits in Europe over $100 million between 2004 and 2006 have had a value at exit of over 6x the capital invested on average. Such exits have included big attention-getting names like Skype and VistaPrint, but also include telecom companies like Iliad and semiconductor companies like CSR.

As European IPOs see more success and entrepreneurs begin to be sourced from Eastern Europe, Cook says, Europe’s VC environment could be on par with that of the US within a few years.