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16 October 2013

Personality of the Year - Michael Lynch, Invoke Capital

Michael Lynch, this year’s Global University Venturing Personality of Year, has never been shy of a battle.

Author: James Mawson

It takes a rare breed of person to go about raising $1bn for his debut venture capital fund targeting university spinouts while fighting a multibillion legal spat over alleged accounting improprieties, but then Michael Lynch, this year’s Global University Venturing 2013 Personality of Year, has never been shy of a battle.

While the fight around Lynch’s former start-up Autonomy continues, Lynch has raised £1bn ($1.6bn) for Invoke Capital, looking to apply the same thought process to UK spinouts that took Autonomy from a £2,000 loan to a $11bn valuation at the time of its trade sale to computer maker Hewlett-Packard, or, paraphrasing a quote from the film Untouchables, to “bring a gun” to the venture capital “knife fight”.

Autonomy provided the best-ever returns for European venture capital and was responsible for spinning off the world’s largest video search engine, Blinkx, valued at $225m at its flotation in May 2007 – Lynch remains a director of Blinkx, having last sold stock in May 2011 to hold 21.9 million shares.

Earlier in the year, Lynch, whose video interview by Tim Lafferty, managing director at Global University Venturing, for the Summit is available here, said: “UK universities are the best in the world but the technologies on the bench rarely reach the market. Autonomy showed a way of doing this and [with Invoke] we have access to substantial sums of money and the people who did it.”

Invoke, which also has an office in California, said it was “the only investment team in Europe with a dedicated, inhouse research and development division, based in Cambridge, UK,” led by Pete Menell, former chief technology officer of Autonomy.

Alongside Lynch and Menell at Invoke are Nicole Eagan, who previously was chief marketing officer at four listed software companies, including Autonomy; Sushovan Hussain, former chief financial officer and president at Autonomy and who handles its investments and portfolio mergers and acquisitions; Andrew Kanter, former chief operating officer and general counsel of Autonomy; Martina King, who is responsible for media technology; Vanessa Colomar, looking after investor relations; and, as an adviser, Suranga Chandratillake, a technology entrepreneur who founded the video search engine Blinkx in 2004.

Last month, Cambridge University start-up Darktrace became the first company to benefit from Invoke Capital.

Although the exact terms of the investment were not disclosed, the cyber defence firm was expected to raise between $10m and $20m. Darktrace, which is commercializing mathematical research from Cambridge, simultaneously announced that Sir Jonathan Evans, former director-general of intelligence agency MI5, would join its board of directors.

At the time, Lynch said: “We are delighted to announce our first investment in a genuinely innovative company, in such a critical area as cyber security.

Darktrace brings a radically different solution to the challenge of protecting our information in today’s environment of cyber-threat. It is an inherently mathematical approach that does not seek to block information flow, but rather understand it, in all its practical complexity and subtlety.”

His first deal, and before Invoke was founded, after leaving Autonomy was to join a £1.5m series B round for Featurespace, which spun out of research at Cambridge University. UK-listed university venturing fund Imperial Innovations provided half of Featurespace’s B round after it had raised seed funding in 2008 and a £1m A round in 2010, according to news provider Cabume.

He added in an interview last year: “Our advantage is [the quality of research and development] R&D in the UK and our expertise is bringing marketing and international expertise to start-ups.

“The basic venture capital model has not worked in Europe, apart from by a few people, such as Danny Rimer [at Index Ventures] and Hermann Hauser [at Amadeus]. We know how it can work and while there are lots of social media companies what I know is fundamental technology of the sort that have become the only UK companies to have scaled into significant businesses, including ARM, Autonomy and CSR.

“Our issue is how to filter out the fundamental technology, not just find a better mousetrap.”

It is an approach that promises much for the faculty and students working on the big problems of our time.

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