London-based investing hotshot Index Ventures has just announced a new early-stage 350 million Euro venture fund. To hear partner Bernard Dalle tell it, raising the fund was a breeze, with all existing limited partners re-upping their investments. He further said that good startups in London are having no problems raising venture capital and deal flow was just as strong. Really? Well, I guess all those reports that this is a global downturn were just plain wrong! You heard it here, struggling Silicon Valley startups: Just move to London!
Apologies for giving Dalle a bit of a hard time, but I am subbing for Michael Arrington, and it’s a huge pet peeve of mine when venture capitalists blithely shrug off an epic downturn that, let’s face it, has to be hitting them in some way. Let’s just say, I don’t buy that it’s all still that easy.
Of course if anyone could make it look easy, I’d give it to Index. The firm has torn through its 2007 fund of the same size, raised a $400 million late stage fund last year, and has had a string of big exits including Skype and MySQL. Those two helped to rank its best-known partner Danny Rimer as number 16 on Forbes’ annual Midas List. I first knew Rimer as an open source software bull, and last I talked to him, he was bullish on a reinvention of ecommerce.
For Dalle’s part, he wouldn’t tell me much about where the firm was investing going forward. He said the firm would still focus geographically on Europe, Israel and the U.S. and was looking closely at mobile advertising, that ever-present buzzword “the cloud” and virtualization.
Regardless of the fact that I could have gotten more answers from the CIA than this briefing, I congratulate Index on the new fund and indeed hope that money and deal flow is holding up as well as they say across the pond. If you’re in Europe raising money, let us know your experiences in the comments.
Update: Given Index is London-based, there’s further analysis on TechCrunch UK.
Sarah,
No need to apologize. This is the tag of most (at least many) VC’s.
ARROGANCE!!!!
People are getting crushed and you get a guy like this saying to the world “life is good to be a VC”.
“raising the fund was a breeze”
ha! just goes to prove that there are liars, damn liars, and VCs.
yes I am sure they had no problems raising this fund, given how liquid the latest fund’s portfolio is.
I’m not surprised after http://www.anonboard.com got funded.
nice said sarah . i had lost so much money !
Very happily surprised to see this level of funding happening, at least at the VC level. Can we get some exits now?
that’s why my friends are happy.
Moving to London is fine option for ailing Valley entrepreneurs. The UK has a vibrant start-up scene which has weathered the downturn better than most. The scene is much smaller than the Valley, but the quality of the people is just as high.
This news is another validation of the potential of UK and EU start-ups. Index has invested in some excellent companies and many will be happy to see that continue.
Sarah – I think you’re being a bit tough on Index. As a European entrepreneur, I’ve found that the economic environment has NOT been a huge dark cloud looming over the startup scene here. In fact, I would agree that funding is still widely available – you just need a viable business model to get it (!).
We raised a seed round a few months ago, and we had no problems raising money from private and institutional investors. I know fellow entrepreneurs who’ve had similar success in raising larger A-rounds in Europe/UK.
Is it automatic? Far from it. But I’m definately seeing things glass half-full rather than half empty.
I have to agree that we here in Europe have a tendency to invest only in true viable business models… It would be very hard to get a Twitter or Digg funded here, let alone with several million dollars (/euros)…
Does this safe approach make us a failure or a safe haven compared to the Valley?
Sarah,
from my experience running a London-based hub where (security) start-ups and investors meet, I can also attest that venture funding in Europe has not dried up. Given the more conservative nature of European VCs (compared to SV), there are many funds in continental Europe flush with money, who I predict will be taking advantage of the lower valuations now.
I agree and also agree with another comment here, there is plenty of VC money, even in Silicon Valley. What is needed to get it? A good, viable, marketable concept, a good team with good track record with excellent execution skills, etc.
Unfortunately, we often hear –too much! from those with little or none of the above. Of course the economic situation is tight, but we hear every day of new rounds and even substantial seed money for promising start-ups.
Sorry, but this article is a poor piece of writing…
Surprised there is VC hope after all.
Will this credit crisis turn innovation back to Europe?
We will only know the change of powers of this economic crisis in a few years time.
The reason it’s easier to raise a fund during a downturn is that there is loads of investor money looking for a place to go.
An investor wouldn’t put their money in stocks right now, because the volatility, which whilst good for short term buying/selling is no good for someone who wants to buy and hold.
Property is relatively better except the rental returns will not be any good for a while and the market hasn’t bottomed out yet.
Interest rates at UK banks are around 1% if you’ve got a million. Much less if you don’t. In most cases if your bank goes bust (which they seemingly do on an weekly basis nowadays) you’re only guaranteed to get a portion of your million.
Gold and metal prices are going down because of less demand. There may be an opportunity there, however we don’t know when global demand will pick up enough to drive decent returns.
The retreating waters have also exposed the Madoff and Stanford scams with probably many others to be found.
In all, there are a lot of wealthy people who are really worried about where they can put their money right now. There are safe places to put your money but right now most of them require an investor to be trading literally on a daily basis just so they don’t lose money, never mind making a profit.
Blue Chip VC funds normally mature on a 7 year cycle whilst normally outperforming the S&P500/FTSE/Dow Jones and other western Indices.
Given all that Sarah if you had $10 million where would you put it? (Please don’t mention Apple or Google stock)
wow, excellent comment mate, learned a lot just from that
This below-average writer will never have $10M… Her articles are a clear example of how *not* to write a quality piece: poor research, inaccurate conclusions and, above all, ignorance of the topic. The London start-up and VC situation is excellent. Also, it is similar in New York, Seattle, even in San Francisco –There is plenty of VC and angel money to go around -just read the other articles on TC…
I’ll agree with most of the comments here: venture funding in Europe is still OK
We’re in the process of raising VC money in France. It’s a lil tougher than expected (people are still not really comfortable with video games there) but we should still be able to close the round end of Q1.
Although, France is one of the more vibrant VC markets in Europe at the moment.
…meanwhile in India…
http://www.ales..._stage_founding
My question is pretty simple but don’t have an easy answer: is the Silicon Valley loosing his “fashion” even for investor ?
What about Europe ? Can have a chance to reduce the gap ? …or more?
Sarah, it’s your kind of pessimism that keeps the downturn rolling. Fact is that privat spending went up in January and some financial gurus, like Buffett, are positive about ‘09 and beyond. In the financial recession in ‘80, the Danish Prime Minister manged to talk the economy up. Economy is 90% psychology.
ditto. This chick doesn’t know what she is writing about.
Everywhere in Europe are gold, delivery of funds in Europe to the United States to earn more. American real estate is a good choice.
Lets hope for the better future