The world of venture capital (VC), such as Eden Ventures, can be incredibly lucrative for those investing in startups that show potential for high growth. Investors fund the initial business development, then sell their stake once the company is positioned to attract a higher valuation, which helps startups find a footing in the competitive world of tech. It doesn’t come without inherent risks, but the possibility for above average returns has seen a number of VC groups focus on the tech market. Bath-based Charles Grimsdale is no stranger to corporate takeovers, having sold a number of startups to larger firms.
In 2004, he co-founded investment group Eden Ventures to seek out investment opportunities across the UK and European technology markets.
We caught up with Charles to discover his tips for startup success.
TechSPARK: Charles, please tell us about your background.
Charles Grimsdale: My personal background is in software engineering, and I started my first company, Division, back in the late eighties. We were based in Bristol and focused on computer-aided design (CAD) and we floated on the London Stock Exchange before eventually selling to Parametric Technology, which is the world’s largest CAD vendor.
I then co-founded OD2, which was essentially Europe’s first digital music distributor. The years between 2000-2004 were spent negotiating agreements with all the major record labels, and we provided the download platform for a number of major brands, including MSN, Wanadoo, HMV and a number of European firms. In total, we had 40 distribution partners, covering 22 countries.
We sold in 2004, literally the week before iTunes launched, and it was ultimately acquired by Nokia before changing hands to Microsoft – so there’s a significant team of engineers and product developers in Bristol that were originally with OD2.
“Most startups try to do too much. It’s important to have a really defined market”
In 2004, I got into angel investing and founded Eden. Collectively, my partners and I have now completed 65 early stage investments, so we’ve got plenty of hands-on experience in building and running successful businesses, and of also getting early stage business to a successful sale.
TS: What are your biggest successes to date?
CG: We were seed investors in a firm called Cramer, based in Bath, which provisions software for telecommunication companies, and we sold that to Amdocs for $400 million in 2007.
In 2005, we were founding investors and management team members for Apertio, who built software for mobile phone networks, and in 2008 we sold it to Nokia Siemens for $240 million.
We were the seed investors and still the largest investor in Huddle, which is the world’s leading SaaS based collaboration platform for large enterprises.
Angel of the South West: Eden co-founder Charles Grimsdale has helped numerous startups off the ground in the region
In 2006, we helped establish Blinkbox as one of the leading consumer services for downloading and streaming movies and television shows. In 2011, this was acquired by Tesco and it now forms the backbone of their digital operation.
We7, the music-streaming service we invested in alongside rockstar Peter Gabriel, was also sold to Tesco and is now incorporated into Blinkbox.
TS: That’s certainly an impressive track record. What’s the process between initial investment and eventual sale?
CG: In almost all cases we’ll have a seat on the board, but the primary activities are looking at strategy, i.e. how to go to market, recruiting key staff, and helping to build syndicates of investors to provide capital in later rounds.
For example, with New Voice Media – who provide software for virtualised call centres – in the past five years we’ve raised at least $100 million from later-stage investors. That capital has helped fuel amazing growth for NVM.
TS: What projects are you particularly excited about at the moment?
CG: One of my recent investments is Bristol-based Cluster HQ, providing cloud infrastructure using virtualised operating systems. This really excites me because writing operating systems is where I started out back in the late eighties, working on a parallel operating system which was way before its time.
So the things I’m personally interested in tend to revolve around cloud infrastructure and software as a service for business-use.
“I think the ‘Silicon Gorge’ label needs to be marketed more to ensure the area continues to attract talent and investment”
One of our other investments, Brightpearl, also founded in Bristol, is growing rapidly and uses the cloud to deliver an ERP system for small and medium-sized businesses. You can see there’s a theme with Eden having invested in a series of ‘line of business’ apps, which help with productivity and collaboration in enterprise customers.
TS: How would startups keen for investment go about approaching you?
CG: You can contact us via the website. We generally make five or six investments per year, so not a huge number, but that’s because we like to be fairly involved, and there’s only a limited amount of time we can give.
We’re very active in Bristol and Bath, so welcome any local startups approaching us.
TS: If you could offer one piece of advice to a new startup, what would it be?
CG: Focus. Most startups try to do too much. It’s important to have a really defined market focus, and a defined product, but not overstretching what you’re capable of.
We often hear ‘We could do this, we could do that, we could do the other,’ but these firms usually end up failing because they spread themselves too thin. Initially, you’ve got to focus on a very manageable aim, and then look to grow from there.
Don’t get me wrong, you need to pick a big market, but you need to have a focused strategy to succeed in that market. Perseverance is also important.
TS: What are the advantages to being based in the Bristol/Bath area?
CG: There are some really talented people within the tech community and there tends to be fairly low staff attrition, as it’s a lovely part of the world and people end up staying here for many years.
“There’s a real entrepreneurial spirit in Bristol and Bath, with ambitious people looking to build global businesses from here”
There’s a real entrepreneurial spirit, with ambitious people looking to build global businesses from here. I think the ‘Silicon Gorge’ label needs to be marketed more to ensure the area continues to attract talent and investment.
TS: Eden Ventures sponsored this year’s SPARKies. What do you like about the event?
CG: It’s a fantastic promotional night, recognising the immense talent we have here in the South West, and it’s superb for startups to be so visible. It’s also great for networking.
Thanks for taking the time to talk to us, Charles. You can follow Eden Ventures on Twitter, and don’t forget to follow us while you’re there!
