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Mowbray Capital to launch European venture fund of funds

Mowbray Capital, a new firm set up by Horsley Bridge's former European chief Guy Fraser-Sampson, is to launch a new fund of funds dedicated to the European venture industry. It will be the first pure European venture fund of funds since the boom years of the late 1990s and could signal a re-emergence of institutional interest after some very lean years.

'We believe the historic difference between European and US returns is not a matter of geography or culture, but simply the result of having operated two totally different systems,' said Fraser-Sampson. 'Europe can match or even exceed US returns, once Europeans begin to accept and adopt the more successful US model, and there are encouraging signs of this starting to happen.'

Fraser-Sampson highlighted the predominance of consultancy and investment banking professionals in European venture teams as one of the key ways in which the European industry differs from that in the US. In contrast, top US venture capital professionals tend to have an entrepreneurial, company-building background. He also emphasised that European venture firms tend to focus too heavily on rescuing ailing companies rather than building new ones, leading to a funding gap at the seed stage.

'Investment mindsets are also quite different,' Fraser-Sampson said. 'The Americans ruthlessly concentrate on 'home run' wins while the more cautious Europeans are reluctant to let go of a failing company. In America, they recognise it is a top decile game, and that it is a few big winners which drive returns,' he continued. 'It is this attitude which we need to see more widely adopted in Europe.'

The fund will be targeting predominantly European investors and will no initially be trying to raise capital from US sources. The Mowbray team will invest one per cent of total commitments to the fund.

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