Now, depending on how one defines VC – very early-stage firms or a cash-hungry, established small business with a bit more history – the answer may still be the same today as it was towards the start of 2013. Tread with caution, so the argument goes. But as far as one family-backed investment house is concerned, spurning VC makes little sense.

Step forward . Frog Capital, renamed in 2009 after having been known as Foursome Investments, was founded and backed by a European family office acting for the Engelhorn family. It takes exposure to growth-stage companies in technology-driven sectors of the economy. Frog Capital is based in London and has more than €100 million ($135.2 million) of assets under management. As a measure of recent moves, in July, the organisation issued a happy-sounding press release stating it had sold its stake in AIM-listed GB Group. That business, which is an identity verification firm, grew its revenues from £19 million (around $30 million) in 2008 to £39 million for year ended March 2013.

“The investment industry is a fashion-based industry and venture capital has been out of fashion in Europe for many years and considered a sub-par asset class. This is leading to outstanding investment opportunities due to the constrained supply of funds to the market,” Mike Reid, one of the managing partners at Frog Capital, who previously worked for 3i Group, the UK-investment firm, told this publication recently.  

“Everybody has different definitions of what VC is. For some, VC is seen as a highly risky investment in early-stage business. Frog is not a VC, in this light. We are in the business of working with more developed companies providing them with growth capital. Select areas of the family investing world are professionalising in a very serious way. This is having incremental but significant impacts on how the private equity and growth capital industry works,” he said.

The sorts of businesses targeted are those with turnover of between €3 million ($4.1 million) to €30 million, Reid said.

What bothers Reid is that wealthy families are damaging the interests of their heirs by taking an overly cautious investment stance and shunning VC, or anything that looks a bit risky. He thinks this is a great mistake but with some families, Reid says, the message that a degree of risk-taking is sensible and necessary is getting through.

“Such families are having a more aggressive approach to growing companies,” he said. “They are smart, savvy people who have their own on growing businesses,” he said.

“It is not in the long term interest for families to be low risk/low return,” he said.

Finally, that name, “Frog”. The explanation is from the business’s own website – it is all about the “metamorphosis it can effect on ambitious companies”. So there you have it.