Venturing into the unknown
ASKING entrepreneurs what they wanted to be when they were younger is always interesting. Did they have dreams of becoming an astronaut? A milkman? For Patrick Reeve, the founder of Albion Ventures, a venture capital firm, his first hankering was to become an archaeologist, but that idea was shelved early on in favour of business, and preferably one that he managed.
“When I was in my teens I was imagining what I would want to do and I always had this vision that I would end up doing something similar to what I am doing now, I wanted variety and I wanted control,” he says from his office close to the Bank of England.
He first started working in venture capitalism for merchant-banking group Close Brothers, which has been something of an incubator for entrepreneurs across the City. It was also the starting point for Frostrow Capital, the professional services firm. “Close Brothers has a long history of being an entrepreneurial bank. When I joined in 1989 there was no HR department, there wasn’t even a canteen.”
In 1996 Reeve was given his own venture capital trust to manage that eventually grew to have £200m assets under management. He quickly learned the lessons of entrepreneurialism: “Unlike working in a larger bank there was nowhere to hide, I was paid based on my results. That concentrated the mind,” he says.
Then in 2007 he started thinking about the future: “There were three private equity businesses in Close Brothers, at some point is was inevitable that we would start stepping on each others’ toes.”
So how does an employee ask his boss if they would be willing to sell the business to him? Since venture capital trusts are self-contained businesses, they are easy to spin off from a main firm, but it still required some careful negotiation. After raising the issue in 2007, he eventually had a conversation with the chief executive in April 2008: “It wasn’t hugely encouraging, although he did leave the door open.”
At the end of 2008 terms were agreed and Reeve took the venture capital firm private. Close Brothers remains a partner, and the rest of the funding came from the nine partners’ savings and mortgages. The fund has never taken on any bank debt.
When Reeve bought Albion he inherited its investments, including an internet hotel business and Brixton’s Ritzy cinema, “one of our low risk investments”. In total Reeve has made 90 investments and 40 successful exits since 1996.
Reeve says that he is very conservative: “I only take risks when there is a strong chance of success.” But this has its drawbacks: “There were a couple of opportunities in the healthcare and environmental sectors with really interesting global growth prospects that I didn’t have the guts to invest in – even now they’re still pretty high risk, but I rather wish I’d taken the plunge.”
CV | PATRICK REEVE
Age: 49
Born and lives: London
Studied: Modern Languages at New College, Oxford
Drives: “A very old Volvo.”
Previous experience: Qualified as a chartered accountant with Deloitte Haskins & Sells after university before joining Cazenove & Co, where he spent three years in the corporate finance department.
He joined Close Brothers Group in 1989.
Reading: An anthology of Chinese Literature