Having a successful sale under her belt helped her develop the business model – Ariadne’s valued advisory services are given in return for equity. This will sometimes include providing capital through Ariadne’s 53 investor members, or other investors, but often it involves striking partnership deals, assisting with marketing, staffing or negotiation –
something the firm is particularly good at.
Ariadne has closed a number of investment deals on behalf of its clients since December, and while Meyer admits that five ended up with lower valuations than hoped for, there have been some notable exceptions. When we meet, she had just received a phone call informing her that one of her companies had been given a term sheet much faster than expected, and the valuation was spot on.
“But it’s not all about getting the highest valuation possible,” she stresses. “Ariadne will always try to find a middle ground that works for both management and shareholders.”
The friend
Ariadne’s model involves working closely with the entrepreneur. “We’re right there with them,” says Meyer, something she has proven in her defence of SpinVox. She is fiercely protective of Domecq, whom she frequently name checks as one of Ariadne’s triumphs and a leading light of the UK tech scene. Meyer wrote an impassioned blog shortly after the story broke, accusing the ‘hack pack’ of ‘outrageous’ claims. “We owe our entrepreneurs to be rooting for them when they go global, not pissing at them from outside the tent,” she said.
Meyer then found herself at the centre of a sub-debate, as the protagonist of a TechCrunch blog, which questioned her defensive stance and argued that the emergence of a culture where entrepreneurship really is supported depends on the press raising these difficult questions. When I catch up with her over the phone a few days later, she is unapologetic. “You can’t only be there for companies when it’s all going well,” she says. “When the shit’s hitting the fan, you’ve got to be there too. The press is so important to the market that we live in, but I think the criticism has been personal, without reviewing the facts, and unbalanced.”
Perhaps Meyer was filling a void, a notable silence from the SpinVox camp and shortage of others willing to put their necks on the line to support the founders. Either she truly believes in the firm or has resolved to go down with the ship if needs be in her battle to maintain confidence in the business. Either way, if I were Domecq, I’d be reassured to have someone with her credentials offering unfaltering allegiance.
“She is an extraordinary leader,” says Meyer. “I’ve seen so many failures over the past 10 years in the mobile application space. These guys have successfully sold into some of the world’s most important mobile carriers. You can’t pull the wool over Telefonica’s eyes. They don’t deploy globally unless they have a carrier-grade solution.”
But it’s a precarious time to lose the confidence of investors over financial concerns, or customers over privacy fears. Unaudited SpinVox accounts for 2008, reportedly seen by The Sunday Times, show a pre-tax loss of £49m, on revenues of £10m. Although a number of deals with major carriers have been secured since then, the firm’s request for an emergency £15m from shareholders last month has added to media speculation over its stability.
An anonymous dossier has been circulated to shareholders, containing accusations of financial mismanagement, and investors in the latest round are said to have insisted on greater powers.
When a business as highly leveraged as SpinVox has gone for a risky, albeit necessary, land-grab strategy (with the likes of IBM and Google increasingly sniffing around the voice-to-text space) and has yet to hit profitability, maintaining trust is vital. With pertinent questions still unanswered, and the response to the media seeming at best uncoordinated and at worst conflicting, Meyer has got her work cut out. But if she is concerned, she’s giving nothing away, and insists the press don’t know the full story.
“Frankly, I think [Domecq] is extraordinary in what she has done and I think time will tell,” she says.
The entrepreneur
Ariadne sees about 80 companies on a monthly basis, but has 24 on its books. While the firm likes to go in early, it does what it can to mitigate risk. Take a look at the people behind Ariadne’s portfolio – Christina Domecq, Alastair Lukies of mobile banking provider Monitise, BeatThatQuote.com’s John Paleomylites – and you’ll see a pattern emerging. They’re all serial entrepreneurs, and this is no coincidence. “You learn a lot with your first company. We’re not taking first-time entrepreneur risk, when there are just so many mistakes,” Meyer says.
That might sound harsh, but she is the first to admit to hers. She says she got the corporate structure of First Tuesday seriously wrong, hence she describes the subsequent sale as a big win, but also a big mistake. “We were early,” she says. “Could First Tuesday have transcended the dot-com boom and bust, and come out the other side as a business rather than just a networking event? I’m convinced it could if I had been running it.”
In Meyer’s mind, the people who created the real value in First Tuesday – the City leaders across Europe (not the co-founders) – were not compensated in the exit. “I told them at the start: ‘If anyone makes money, we all make money together,’ and they trusted me,” she says. “I was not able to deliver on that because I didn’t anticipate that my co-founders would not agree with what seemed to be a very fair proposition, as the sale happened unexpectedly. With First Tuesday, I had put the seed capital in, but then I made my co-founders equal shareholders to me, despite the fact that they had put no money in and were in San Francisco while I was here.”
Still, Meyer’s 22.5% stake and a £33m exit would have softened the blow, and enabled her to seed-fund Ariadne. This time, rather than co-founders, she brought on investor members, comprising internet entrepreneurs and private equity figures. She must prefer it this way. “You’ve spotted that control freak in me,” she smiles, before adding that this is absolutely the case. “It’s not fun to be in business with people who don’t share the same vision. But I’m very happy with where we are with Ariadne.”