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Hermann Hauser, co founder, Amadeus Capital Partners

Despite the current state of the economy, there's no better time to think about starting a company. That's the view of Hermann Hauser, co founder of Amadeus Capital Partners and someone with almost legendary status in the electronics industry.

So what advice does Hauser have for the would-be entrepreneur? "Do it!" he said. "But make sure you have mentors and have a support network. Just do it! Don't be afraid of failing; once you've failed, you won't make the same mistakes again."
Hauser admits he had been a serial entrepreneur and business angel long before he set up Amadeus in 1997 with associates Anne Glover and Peter Wynn. "It was a natural transition," he reflected. "I'd been involved with private investment beforehand and had been associated with around 50 companies before Amadeus."
Amadeus has grown to be a significant player in the venture capital business. It has £460million under management and active investments in around 40 companies; mainly in Europe, but selectively in Israel.
How does Hauser position Amadeus?
"It's a general purpose high tech VC company covering all sectors, including hardware, software and so on," he said. "But we don't get involved in pharmaceuticals and biotechnology. One area of interest is medical technology and we recently sold Solexa for $600million after it grew from nothing to $100m in one year. With the company's improving share price, it became a $1billion deal."
Hauser also describes Amadeus as a 'hands on' VC company that doesn't shy away from technology. "We like quality technology companies, such as CSR.
How has the VC market in the UK changed over the last few years? Hauser said that, while the market has grown over recent years, it hadn't reached the frenzied levels that were seen in 2000. "What has happened, which is important, is that quality has improved uniformally. In our first fund in the early 1990s, we used to do around 17% of deals with serial entrepreneurs. Now, that figure has risen to 70%. That's spectacular proof that the quality of management has improved."
But has the economic downturn of the last year had any effect on the sector? "In terms of deals, things are very good at the moment," Hauser reflected. "Many good people have been let go by their employers and are willing to start a new company. Recessions are always a good time to start a company, but the availability of capital is bad and the VC industry is going through something of a crisis."
Hauser believes Amadeus is one of the few funds with money. "While we have recently closed the Amadeus III fund at £160m, some of our colleagues have run out of money. This is making it harder to get syndicates together, which is the way in which most deals are structured."
So is there more activity at the Angel level? "There's always a lot more activity at the Angel level," he pointed out, "but that's typically dealing with sums of the order of hundreds of thousands, rather than in the millions. We have a seed fund which makes investments of less than $1m but, normally, $1m is the minimum investment we'll make."
The fund to which Hauser refers is the Amadeus and Angels Seed Fund (AASF), focuses on seed stage technology companies in the UK. AASF is jointly funded by Amadeus, the UK Department for Business Enterprise and Regulatory Reform, business angels and private investors. As a result, AASF has access to proprietary, high-quality deal flow, complemented by the discipline of a large VC fund and the expert knowledge of business angels.
Amadeus says that, like all its funds, it is looking for companies that offer a novel technology, although there is not the need for it to have been fully exploited. Managers look for evidence of entrepreneurial management and the ability of the company to attract world class managers. Although concentrating on UK based companies, it does want to find companies with global ambitions
Hauser pointed out that it's important to have the right network, with connections into universities and bigger companies. "Universities are important and becoming more competent and more willing to work with spin outs. They are also becoming more knowledgeable on how to do this. For example, they have technology transfer officers and this is a very important development."
There has always been the suspicion that the UK lacks an entrepreneurial spirit. Does Hauser agree?
"It used to, but its managerial talent has improved by a factor of four. Having said that, although it's better than it was 10 years ago, relative to the US, the UK is still well behind. But it's improving and we're trying to catch up with the US. And the 'can do' attitude can now be found in the UK."
Is there still a fear of failure when it comes to start ups? "There is," Hauser noted, "but it used to be worse."
So should entrepreneurial skills be taught at schools and universities?
"The Government should be encouraging entrepreneurs," he asserted. "I'm lobbying hard for entrepreneurial centres to be associated with universities and have donated a centre to Cambridge University."
But can entrepreneurial skills be taught? Hauser is in no doubt they can. "Yes, and they should be! It's like teaching the piano. A piano student won't be any good if they're tone deaf, but they need a piano! We have to create the right environment."
If you're thinking of launching a start up, where does Hauser see opportunities? "We're very excited about plastic electronics and are involved with Plastic Logic, one of the leading companies in the sector. We see no reason why plastic electronics shouldn't be as important in the future as silicon is today – a $300bn business."
Hauser – and Amadeus – have been involved with some extremely successful companies in the past. Which of all these deals has been most satisfying? "It was good to see CSR becoming a company with annual revenues of $900m in five years: a pretty spectacular growth rate," he said. "CSR was a pioneer; it was first to figure out how to put a 2.4GHz radio on the same chip as the baseband processor and that was a very challenging task. And its main competitor – Ericsson – wrote the Bluetooth standard. But, with any deal, it comes down to working with outstanding teams."
Does Hauser have any tips for the future? "Icera is doing very well producing chips for high speed download in mobile phones. It's ramping sales and this is very satisfactory," he concluded.

Author
Graham Pitcher

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