PROfounders Fund Powered by Entrepreneurs

Rogan Angelini-Hurll, the co-founder of PROfounders Capital, has what he calls a simple approach to venture investing—entrepreneurs should help fund entrepreneurs.

The London-based firm, which launched in June 2009, invests between £500,000 and £1.5 million ($800,000 and $2.4 million) in digital media and tech companies, primarily in Europe. It invests from a £30 million ($48 million) fund that was raised from 13 investors, including 12 investment partners and Angelini-Hurll himself, with each committing at least £250,000 ($400,000).

It aims to capitalize on the growing success of entrepreneurs in Europe.

“The pool of entrepreneurs in Europe is starting to gain critical mass,” says Angelini-Hurll, who derives his name from an Italian grandfather and Scottish grandmother. “We’re seeing second and third generation entrepreneurs. I’d like to think that European venture and European startups are going to have a great period for the next four or five years.”

PROfounders has attracted a Who’s Who of media and technology players since Angelini-Hurll and Brent Hoberman, co-founder of lastminute.com, and a childhood friend from his days at Eton College, launched the firm in April 2008.

“We’re friends and we‘re always talking about the business,” Angelini-Hurll says. “We started putting together the structure and doing some marketing to see whether there was proper appetite roughly the same time as Lehman Brothers went bust [in September 2008]. It wasn’t a great time to capital-raise, to be honest.”

PROfounders has added experienced players along the way. Michael Birch and Peter Dubens joined Hoberman as investment partners. Birch previously co-founded social networking site Bebo in January 2005 with his wife, and sold it to AOL for $850 million in 2008; Dubens, founder and head of Oakley Capital, helped establish 365 Media as one of the leading online sports content providers in the United Kingdom and selling it to BSkyB in December 2006 for £110 million ($180 million).

Another member of PROfounders is Sean Seton-Rogers, who has earned his stripes investing in tech companies in the United States and Europe while at Balderton Capital and Commonwealth Capital Ventures in Boston. He joined PROfounders as a general partner in early 2009.Q&AVCJ Contributor Jennifer Hill talked with Angelini-Hurll about PROfounders, his views on the European VC community.

Q: Why did you start PROfounders?

A:

There’s a growing number of successful entrepreneurs in Europe, many of whom have exited businesses and have an ongoing interest in startups. They want to see the next generation succeed. The idea behind PROfounders was that we should formalize that interest. We thought there was a gap in financing between the very good angel community and larger VCs. The space in which we play is relatively under-resourced.

Q: How many startups do you expect to back?

A: It’s a 10-year fund with a 5-year investment period. Over the life of the fund we’d like to invest in maybe 20 companies.

Q: How are your efforts going so far?

A:

People have been really positive about the concept of successful entrepreneurs helping the next stage of entrepreneurs. In the United State in the past couple months, we’ve seen the rise of super angels and micro-VCs, so it’s an attractive space to be in. We’ve invested in six companies so far, and have term sheets out to two others.

Q: Are there any sectors you particularly like?

A:

We’re driven by themes, and one theme we like is education. One of our investments, Mangahigh, sits in that space. [The games-based learning site focuses on providing math education for secondary school students]. We also like e-health, though we haven’t found an investment in that area yet.

Q: How’s the deal flow?

A:

Mostly, we receive business plans from our investment partners. And we actively seek out plans by attending conferences, for instance. Since we launched, we’ve seen more than 2,000 business plans. We realize we have limited resources. We want to be able to return relatively on out investments. So we try to be brutal when deciding who we should spend out time with.

Q: Any advice for entrepreneurs seeking backing?

A:

Be clear. Have clarity of the idea and clarity of the amount that you want to raise and where that will take you. I’m incredibly simple. I assume no revenue as a starting point. But you need to know where your business might go and what milestones you’re aiming for.

Q: How has the global recession affected your firm?

A:

It was the best time to set up. Valuations are more reasonable. The competition for deals is less. VCs who have been around for ages have quite a lot of legacy issues. At the low point in the economic cycle you can take market share more easily than you could at the height of the boom when people were spending money with gay abandon.

There’s a growing number of successful entrepreneurs in Europe, many of whom have exited businesses and have an ongoing interest in startups. They want to see the next generation succeed.

Rogan Angelini-HurllCo-founderPROfounders Capital

Q: Are there enough good opportunities for VCs?

A:

Compared to the U.S., there’s less risk-taking in Europe, but that is changing. There’s generally a good move towards entrepreneurship and setting up on your own, so we hope the market will become more active.

Q: What investment experience do you bring to PROfounders?

A:

None in the VC sense. Sean provides that. As an angel investor, I’ve invested in friends’ companies and I helped Brent with the model for lastminute.com and the finance for mydeco [the online interiors website backed by VCs].

I studied law at Oxford University. My father told me if I want to be a lawyer, I shouldn’t study law. I loved the academic side. I loved numbers, so I went into banking.

I’ll tell my children that for at least the first two years after university they have to go out and get their hands dirty and start up a business, especially knowing what I know now.

Q: Where did you get your startup experience?

A:

I got a good all-round training at Citibank. I had a six-month stint in New York and covered Asian markets, but left after two years to set up a company called Asian Rating Consultants. I was only 24, and persuaded a couple of ex-directors of Standard & Poor’s to provide the “grey-hair” experience.

It was a consultancy business that helped Asian companies obtain a Moody’s credit rating or improve their existing one. I wouldn’t call it a huge success. Being a consultancy business, it wasn’t particularly scalable. To our detriment, banks—which had, until then, viewed credit ratings as non-core business—suddenly saw it as a good freebie to offer with bond issues. I ended up back with a big bank as an equity researcher.

Q: Was that a difficult transition?

A:

I’d met my wife by then, so that was the trade off. I don’t regret it though. I have a lovely wife and three beautiful children. Besides, being on a research team is a bit like running your own business. You decide what you do. In 2004, I resigned to set up my own business, but before I’d left I got lured back in by the promise of a huge amount of wealth. It was knife-edge stuff.

Q: What are your plans in the future?

A:

I want to make sure that this fund is well invested and well managed, and then we’ll look at fund two and fund three. In an ideal situation, by the time we get to fund three, we should have created a sufficient number of successful entrepreneurs from the first fund, and they can fund the third.

Rogan Angelini-Hurll

Co-founder and general partner of PROfounders Capital

Birthplace:

London

Age: 40

Education: Eton; New College Oxford

Work history: Debt origination and credit ratings at Citibank (1992-94); founder and CEO of Asian Rating Consultants (1994-97); freelance consultant at Spectrum Strategy Consultants (1995-97); media equity researcher at Salomon Brothers/ Salomon Smith Barney/ Citi (1997-2008); co-founder and general partner at PROfounders Capital (2008-present).

Last book read: “The Beautiful Games of an Ordinary Genius,” the autobiography of Chelsea Football Club manager Carlo Ancelotti

Did you know? Angelini-Hurll proposed to his wife with a poem, read at the finishing post after the last race of the day at Royal Ascot in 1998.

Source: VCJ reporting