Pond Venture Partners Ltd

Financial Times

20-Oct-1998

COMPANIES & FINANCE: UK: Fund aims to promote technology groups

A venture capital group designed to provide first-line funding to young UK high-technology companies has been established with operating arms in Silicon Valley, Tokyo and Richmond on the outskirts of London.

Pond Venture Partners is a comparatively small fund - it has raised Dollars 13m (Pounds 7.6m) from Japanese and European entrepreneurs - but intentionally so. The aim is to seek a handful of companies with world-leading technology, provide between Dollars 500,000 and Dollars 3m in seed capital, and work closely with them to enable them to market their products in the US and Japan.

The partners are George Hara, a veteran of Japanese/ US alliances, Charles Irving, a former commodities trader, based in the UK, and Richard Irving, the group's technology specialist, based in San Jose.

Mr Hara said US start-ups could succeed without an overseas strategy because of the size of the North American market: "Pond believes that long term success requires that even small UK and European companies build an international presence."

The fund is looking for companies with novel technology in communications, internet tools, computing and consumer products. It has already invested Dollars 2m in Microcosm Communications, a UK company developing chips for the optical fibre communications market.

Charles Irving said that UK technology companies typically found initial funding difficult. Their requirements were too small for venture capitalists or conventional investment banks and without a balance sheet, investors were taking the gamble purely on the quality of the management and the technology. Venture capitalists in Europe, moreover, were ignorant of technology in comparison with their Silicon Valley equivalents. He said the principal weakness, however, was marketing.

Pond intends to invest about Dollars 1m for a 20 per cent stake in a small number of companies with a view to exiting after two to five years. Mr Hara said he had chosen the UK as the next opportunity after the US and Israel: "After that, we expect other European countries to provide attractive possibilities, spurred on by the emergence of a single European currency."