Focus: Tuning in to Tuesday Net fever

IT'S A Tuesday night at London's Cafe de Paris and the room is full of optimists seeking their fortunes on the cyber treasure trail. In one corner is 30-year-old Michael Ross, who has quit his pounds 100,000- a-year job at McKinsey management consultants to head up Easyshop, an online retailer selling lingerie and perfume. Networking nearby, is Adam Laird, 27, who left Boston Consulting to run Magicalia, after lining up pounds 1m of venture capital to back its string of hobby-focused websites. Amid the crush, admiring glances follow one particular man. "He had a stake in a company that was bought out by Amazon. com,'' explains someone, in awe.

This is First Tuesday, an eclectic club of energetic entrepreneurs, wishful wannabes, venture capitalists and the merely curious, all of whom want to be part of Britain's Internet revolution. Formed 11 months ago by four like-minded friends, First Tuesday had 2,000 members by the start of last month. By the end of the month it had 3,000. "The hype has ratcheted up a notch,'' says Nick Denton, one of First Tuesday's founders. "It's general enthusiasm for the Internet sector, and the Freeserve float. Everyone's looking to do something on the Internet and make money.'' Mr Ross agrees: "It's a combination of the gold rush and the Wild West. It is nice to be in a room where everyone thinks they are going to be millionaires.''

The club meets on the first Tuesday of each month - less Saturday Night Fever than Tuesday Night Frenzy. Demand for places is now so high that only those with confirmed bookings are told the venue - by e-mail, of course. Casting aside English caution, First Tuesday's "entreneteurs" - mostly under 35 and male - are attempting a British replay of the first wave of start-ups in Silicon Valley a few years ago. No one is dwelling on the likely failure rate. Julie Meyer, another First Tuesday founder, says: "The idea of not risking a bit, not doing something, strikes me as sad. If you get out there, and you do something, you've already succeeded. What you learn in the three months before you go bust, means you've done something.''

The possibility of making one's fortune is only one reason people are quitting well-paid jobs for Internet start-ups. Mr Laird says: "It's not about money, it's about doing something unbelievably exciting.'' Mr Ross, who started as Easyshop's chief executive last week after buying a significant stake in the business, will spearhead a pounds 5m to pounds 10m round of funding for the company's expansion. "Money is clearly a motivation. But it's also playing a bit role in what we will look back on as a revolution in the way the UK does business with itself,'' he says.

But money provides much of the buzz at a First Tuesday gathering, not least because mixing with the sweatshirts are the suits with the cheque books. Venture capitalists - "VCs'' in this world - scout the events for investment opportunities, while would-be entrepreneurs keep their antennae tuned for potential seed capital.

Mr Laird and his partners at Magicalia met their financial backers at a First Tuesday meeting three months ago. Magicalia runs "passion-centred'' websites and its flagship site, Bikemagic, was launched in April offering the cycling enthusiast general and local information. To expand into new hobby sites, they needed money. The introduction to a man from Atlas Venture proved key. "Atlas expressed an interest in what we were doing, and we went to see them.'' A pounds 1m investment, in return for a stake in Magicalia, has just been finalised. Is Mr Laird surprised that someone his age, with no experience of running a business, can raise such a sum? "We fundamentally believe that what we are doing can work very well. And Atlas is not going to throw money at something it does not believe in,'' he retorts. Later this month, Magicalia will move from Mr Laird's living room to an office.

In the current heady atmosphere, there seems to be money available for any half-decent business plan. Tom Hughes, 26, who runs Milkround Online, a web-based graduate recruitment service now accessed by 40,000 users a month, says: "After my first First Tuesday, I had three people calling me by Friday asking me, do you want to be bought out or are you looking for money?''

Often the difficulty is knowing what to make of these offers. Ms Meyer says: "When I talk to the entrepreneurs, they say the biggest worry is the seed capital, knowing really if they've done a good deal with an investor.'' The new entrepreneur lives in fear of signing away too large a slice of the business.

In the UK, the greatest hurdle is in attracting the fairly modest seed capital needed in the early stages, with venture capitalists keener on bigger investment opportunities. Ziad Salem, 25, runs Future Internet Technologies, a company specialising in the Java programming language. ``The problem is that the venture capitalists are quite bureaucratic.'' European start-ups tend to be looking for pounds 1m to pounds 2m, compared with the $20m that their US counterparts might want, he says. "But for the venture capitalist, it is still the same paperwork. Very few venture capitalists would be interested in pounds 1m to pounds 5m investments.'' In common with many Internet start-ups, his company's first pounds 1m was raised through private investors. "Now we've got to the stage where private investors won't be able to invest; we'll want to raise pounds 5m.''

Such has been the success of First Tuesday, that would-be investors have even been knocking on its door offering financial backing to turn the club into a fully-fledged company. Since last month, Ms Meyer, 32, has been working full-time at First Tuesday, and events will now take place nearly every week. Last night, the club launched Europe-wide, with co-ordinated meetings from Helsinki to Madrid.

For the time being, the club remains faithful to its grassroots ethos. Ms Meyer is a walking contacts book - and generous with introductions. "I get such a kick out of finding people for companies. For example, some people don't know who is doing the seed capital in London. It's all about sharing information. I'm in a position where I know a lot of people and can see this white space and put people in touch with each other.'' Membership of First Tuesday is free, and so is the help on offer, be it the jobs site, guidance on a business plan, or an introduction to a would-be manager or investor.

For many, the club is an opportunity to compare experiences. Michael Liebreich, 36, who last November set up complete-skier.com for winter sports holiday bookings, says: "It's a reality check. It's a support group. It's lonely setting up a business, and it's very, very hard work. We're inventing an industry, and sometime's it's just good to meet people who have had the same problems, and ask them: `Am I crazy?'."