IT Week: As partners at Advent Ventures, could you explain how a venture capital (VC) firm like yours works?

Martin McNair: We invest our expertise as well as our funds in early stage businesses - and in turnarounds, spinouts and buyouts. We would regard ourselves as business builders. We’ve invested in something like 160 businesses - upwards of 35 or 40 have now exited through IPOs here or in the US. All of us have experience of setting up and running businesses, often venture-backed. We currently have three active funds: Fund 2 was raised in 99, and is £105m; in 2001 we raised Fund 3, which at £300m is relatively large; and more recently Fund 4, £129m, raised at a more difficult time for venture money. Fund 2 is fully invested, but Fund 3 might have one or two more deals, and Fund 4 we’re actively investing.

Who provides the money?

McNair: Typically several dozen investors - pension funds, banks, private family money - a spread of US and European investors.

What value to you add?

McNair: European VCs are now putting in a lot more effort and have built up a greater pool of resources to help create businesses. We’re not just taking carefully placed bets in early stage businesses and watching which way they go, we’re actually helping them. I think that’s a very important part of the VC’s value-add. It’s something that a small collection of VCs have been doing for the best part of two decades, following the US trend where they’ve been doing it for a good two more beyond that.

We help not only in getting the business established, but also with strategy, pulling people together, putting larger syndicates of investors together, with partnerships, how they’re going to market their business, or globalise their business. We bring a lot of experience, not only on a personal level but in the network of people we can draw around us.

I have heard conflicting things about the availability of capital for Web 2.0 businesses. What is your take?

Frédéric Court: We are looking at quite a few Web 2.0 startups but they all have a very strong business case - they can monetise what they are doing. A lot of the things that were promised five or six years ago are now achievable because broadband is here, and because business models are now clearer - the two big drivers are advertising and e-commerce. Also, there are a lot of very experienced people who have now been working in the web field for ten years.

McNair: The most important consideration for us is, can you build a business? The fundamentals don’t change: it’s about formulating proper strategies, understanding your market, sustainable innovation, new products and good management.

How do you make contact with new companies?

Court: More and more what we do is define what we like, then go and find those companies rather than wait for them to knock on the door. What we want is to make sure we see the companies that we want to back, rather than vice versa. Today it is very easy for small companies to generate publicity, so we can find them very easily on the net - it’s no longer like they are hidden in a garage somewhere in Cambridge.

How do you judge the technical merits of an idea, and the quality of the entrepreneurs?