Venturing into Europe

04/28/06
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High-profile Dublin venture capitalist Fergal Mullen is returning from the US to sniff out prospective technology investments.

By Karlin Lillington, The Irish Times
April 28, 2006

Fergal Mullen may not be instantly recognisable to the Irish technology world, but it is a name that already carries some serious clout behind the scenes.

Two years ago, Mullen swung one of the biggest technology investment deals in recent years in the big-bucks playground of venture capital, the United States - one that realised an eightfold return of $400 million (€322 million) for his employer, Massachusetts-based Highland Capital Partners.


The $50 million investment in VistaPrint, an online printing service with an international presence (including in Ireland at www.vistaprint.ie) was only Mullen's second deal at Highland.

Having established a good profile in the highly competitive venture capitalist (VC) world, Mullen is now returning to live in Europe to sniff out prospective technology and life sciences investments for Highland.

According to Highland managing general partner Paul Maeder, the blue-chip VC firm thinks Europe has as much to offer smart technology investors as the trendier destinations of China and India, and wants to be on the ground to talk to companies and entrepreneurs.

Mullen says Highland is hitting European shores with a strong brand, good recognition and "a very European-oriented team" that can bring some American VC attitude alongside an understanding of European labour laws and differing cultures.

That, he thinks, will give Highland an edge in Europe, where each country has its own strengths in the tech and life sciences sectors as well as perhaps five to six high-profile venture capital groups - all generally reluctant to make big investments.

Highland, by contrast, comes with fairly deep pockets. This is not a firm looking to make small starter investments - one current fund is closing in on $1 billion. The firm is on the prowl for ambitious entrepreneurs with a vision for their growing companies. Highland doesn't blink at $10-$20 million commitments, he says. "Entrepreneurs are clever people. If you tell them, we'll let you shoot for the moon, that's like taking off the handcuffs. Over here, they're so used to hearing 'no', and reasons why they should think smaller," says Mullen.

Rolling the investment dice for such big stakes is a long way from a low-key Dublin background where Mullen attended Greenhills College in Walkinstown and went on to start an electrical engineering degree in the 1980s at the Dublin Institute of Technology in Kevin Street.

"I'm sure I'd not have ended up as a VC without finishing college in the US," he says. His route was circuitous - he went to the US to fiddle with some musicians, ending up for a summer in Rhode Island and, because of his talent as a runner and a chain of unexpected introductions, was soon offered a place at highly-regarded Brown University in Providence, Rhode Island.

At Brown he finished his engineering degree alongside a second degree in business studies. After graduation, he joined consultants and integrators Cambridge Technology Group just as the company "was going to the wall" - which he considers a stroke of luck because the consulting arm was bought out by a private equity firm and relaunched as Cambridge Technology Partners (CTP).

Mullen became one of the original 30 employees in a firm that would grow to 4,800 globally. Both his business and technology skills came in handy for a string of roles that saw him in charge of multinational Unilever's account, opening CTP's first European office in Amsterdam in 1993, then moving into the financial side of the business after returning to business school for two years.

"It's hard in this business to develop judgment and pattern recognition if you are too one- dimensional," he says. "If you have never developed technology strategies for clients, it's hard to understand what their issues are."

By this time, CTP was one of the hottest companies in the technology consultancy sector and with client companies interested in receiving investment, Mullen initiated a $25 million investment arm for CTP in 1997.

"We made 24 investments up to 2000, had 12 IPOs [ initial public offerings] and lots of other very good deals." The fund eventually grew to $200 million. After basing himself in Switzerland to grow a CTP acquisition, he left the firm in 2000 to set up on his own, establishing a $100 million fund in partnership with security consultancy RSA.

While working on his own, he was in the US introducing Irish software firm Performix to US VCs - including Highland. "They asked me if I was interested in making the conversation more serious," he says, and has been with them in the US for several years now.

He earned his stripes with Highland with the VistaPrint deal, which he attributes to a mix of luck, hard work and being able to sense what clients want (an investment from one single VC firm, not a partnership of several firms). Everyone needs a lot of luck in this business," he says.

In this case, luck came via a school fundraiser. "Like everything in the world, you just don't know where deals are going to come from, and this one came from my kid's school," he says.

Mullen and his wife had left their table briefly and when they returned, someone else was sitting in his seat. The someone turned out to be Robert Keane, the founder and chief executive of VistaPrint, who had recently relocated the company from France to the US.

It turned out VistaPrint was moving into the same office park as Highland and Mullen arranged to have coffee with Keane to discuss getting a cafeteria off the ground for employees. Mullen had no expectations from the meeting as he had heard that Keane was not looking for funding.

"But at the end, he hit me with raising some capital. I said how much, and he said $50 million. I nearly fell off my chair because this was an internet-based company and the market hadn't turned yet [ after the recent dotcom crash].

"I said: 'That's interesting. That's a lot of money. I'd love to hear the pitch' and in 15 minutes, he could lay a pitch in a very clear and articulate way." In the end, several different groups of VCs all made a bid for the investment but VistaPrint went with Mullen and Highland.

The company went public last September on the Nasdaq at an offering price of $12 a share - "three times what we paid" - and shares are now hovering at the $33 mark, he says.

Does such a success story make him less hungry, now that he doesn't have to prove his capabilities? "I'm hungry as hell. It gives me a tiny bit more confidence that my judgment is half decent, but I'm not the sort of person who feels, 'I've made it'," he says. "I'm out here looking for my next VistaPrint."

© The Irish Times
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