A2E Venture Catalysts founder Amin Amiri is turning a profit from turnarounds Venture capitalists all want to invest in profitable, cash-generative businesses with good management that have a proven track record. If you're the owner of a business like that, you auction yourself off and the buyer overpays for the deal," he says. Amiri has a different approach and says sector and business health are far from the only areas where he's set himself apart from venture capitalists. "As an accountant, I'd advised management teams, investing companies, done due diligence, found deals - I could see everything that was wrong with the industry," he says. Amiri points to "flaws" such as "insufficient skin in game" among venture capital firms" partners, funds" restricted lifespans and their "dogmatic" approach to companies" management teams as mistakes he wanted to avoid. Venture capitalists start with an argument with the founder over stake and a big fight over terms and provisions - a divorce before they're married. You wouldn't believe how demoralising that is for management teams. He doesn't pretend to want to work with founders and owner-managers of the businesses he backs - instead he buys them out with his own cash. Usually the owner-manager is the problem - they're not ambitious enough, or they're taking money out of the business. Nor does he parachute in turnaround experts to save the ailing business - he gives 25pc of the equity back to the existing management team. A lot of turnarounds fail because the guy comes in all guns blazing. I ask the managers to rewrite the business plan. The trick is turning a normal guy who has been in the business 20 years into an entrepreneur. There's also no set timeframe for exit, just "when the management team wants to sell." But once they do, they must set aside up to 10pc of the deal price to be distributed among all employees. It's amazing how uplifting that can be for the most junior person. Once Amiri has approved the new plan, his approach is hands-off - brief phone calls to approve investment decisions with directors are better than interfering in board meetings, he argues. And, unlike the buy-out firms castigated by Jimmy Choo co-founder Tamara Mellon last week for their failure to invest in her shoe business, Amiri will put more cash aside for investment than for the initial purchase. The approach has served him rather well. Of the 20 companies he's backed, while three have failed, eight have been sold for a profit. The sale of Covrad to US fund Sun Capital at the end of 2010 for £13.6m earned Amiri's firm total returns of more than 40 times his original investment. When I bought the company, no one was interested. The herd mentality of avoiding UK manufacturing was, as ever, present. We turned a neglected company into a world-class business with the entire product range being manufactured in Coventry. From his eight exits and three failures, he claims that by the industry's preferred performance metric - net internal rate of return (IRR) - he's hit 96pc. It's a slightly artificial figure in that he's not including the value of his remaining investments, although he seems to be comfortably outperforming most venture capital firms. According to the British Venture Capital Association, venture capitalists achieved an average one-year IRR of 8.5pc in 2010 - a "strong performance," according to the industry body.