January 17, 2008
A View From Paris on French VC Trends
We checked in with Pascal Mercier of Aelios Finance, a corporate finance advisory firm in Paris, for his view on early stage venture trends in France.
Aelios did 20 transactions last year, many of which are listed on its website.
One thing notable is the size of the early stage rounds it helped to raise for companies like Kayentis, AirinSpace, BlueKiwi, and 24:00h (all of which we've covered in these pages). It also advised Criteo on its €7M round announced this week with Index Ventures as the lead investor.
Here is what he said on capital available in France...
The French venture funds raised a very high amount of capital last year. The FCPI- type of funds typically raise about €30M every year, but in 2007 we saw firms raising €50M and €70M. Regular “LP GP” funds, such as Ventech or Alven raised large amount of Capital also based on their good performances. [FCPI investors receive a tax break and are similar to VCTs in the UK].
That Means It is Easier for Founders to Raise Capital?
Yes but even with a lot of liquidity in the market, there are still high hurdles to qualify for capital.
What are VCs Looking For?
Internet related ventures. They know that France has some great entrepreneurs in the Internet industry, and a good ecosystem with a lot of success stories.
The software sector is another story.
Within the Internet category, online advertising-related ventures are of interest, as are companies that can provide Web 1.0 companies with next generation or Web 2.0 innovation. A typical transaction that illustrates the point is Expedia's acquisition of TripAdvisor. They paid a lot of money for that startup.
And music industry related Internet ventures. It's the size of the market that is attractive and the knowledge that business models are changing. There will be new business models.
Another area where we see interest from investors is in companies that provide Web and eCommerce know-how to brands.
Just three years ago, it was taboo for good brands to sell via the Internet. Now Dior and Louis Vuitton are online. The others will follow and many are too small to do it themselves.
Beyond the Internet?
Everybody, including early VCs are looking for cleantech investments, but they need to find companies that have a capital requirement cycle similar to the life of a VC fund. There are not a lot of such ventures, typically they are long on R&D, and are selling into markets with very long product design or implementation schedules. As a result we don't have many such transactions, yet. Biotech and medtech remain good business areas.
How would you characterize the past two years [of venturing] in France?
2006 was the year of online video
2007 was eCommerce
And how do you see the coming year?
2008 will be more ecommerce and advertising innovation, particularly firms that can make advertising less costly than it is now.
Posted at 08:17 AM | TrackBack | Permalink
November 05, 2007
Top 100 Women in Finance List - Just One For the VC Crowd
Triangle Venture Capital's founder and general partner Ulrike W. Fricke was named one of the Top 100 Women of Finance in Europe in this year's round up in Brummell magazine. She's the only early stage VC who we eyeballed in the list.
(Published semi-regularly by efinancial news Brummell is a bit like Vogue magazine-for-financier types in that the ads are almost as good as the content.)
We always try to scan the names of investment allstars, or envy lists, and other high-flyer rankings that financial publications over here put out each year to see how venture capital is faring. We figure if early stage VC fund managers make a strong showing compared to investment bankers and private equity firms then it's a sign that the asset class is on the upswing.
However, for the past five or six years European VC typically only gets a token winner or two. As we've said before it's one of the least loved asset classes institutional investors can buy into (although it may have moved up a few rungs by now, replaced by funds that invest in financial instruments for less than AAA debt).
Enough of the sideline kibbitzing. We think one reason this early stage, German-oriented fund founder made the list is that last year she was able to sell the firm's vintage 1999 to 2001 portfolio to an undisclosed institutional investor, pointing out at the time that returns on the porftolio were in the 'upper quartile' compared to its peers in the US and here.
Since so few VC tech funds actually generated cash returns for the years 1999 and 2001 it was an achievement. 
What is particularly interesting from the alarm:clock euro's point of view is that Fricke's fund managers seem to be good at helping startups generate revenue streams. Of that portfolio Triangle sold, the "most successful ones will were making €8-10M annually.
Recent investments for this modestly sized venture firm include iPharro, which has developed video search tech but is currently pushing its tech as an alternative to DRM in video.
Triangle also invested in xaitment, which sells tools for games developers to create more lifelike opponents - it calls them bots - for virtual worlds and simulation games.
This startup recently opened a Silicon Valley office and recruited Katja Reitemeyer as CEO. She moved from Germany to Silicon Valley a few years ago to lead sales in the US for NXN Software (a Euro VC-backed company), which was acquired Avid Technologies
Both startups are hiring.
View Triangle Venture
Posted at 06:47 AM | TrackBack | Permalink
October 24, 2007
Skype's Michael Jackson Joins Mangrove Capital
The latest issue of Mangrove Capital's newsletter (pdf)features the news that Michael Jackson one of the members of the early management team of Skype has switched to the investment side of the table, joining the Luxembourg-based venture firm. Mangrove, in case you need reminding, was also an early investor in Skype.
He says he might be old-fashioned but he likes tech companies that are selling something. He headed up Skype's tech operations and is a former Tele2 exec.
Posted at 10:37 AM | TrackBack | Permalink
September 18, 2007
Euro VC Fund News: PTV Primes The Pump While Viadeo's and MXP4's Backer Raises €150M
French firm Ventech , which you may recognize as the backer of startups we have covered here like business socnet Viadeo, and MXP4, has closed its third fund on target at €150M.
It says it will continue to invest in early stage companies operating in the IT (software, hardware and communications, and applications and services) and biotechnology sectors in Continental Europe.
New LPs contributed nearly half of the fund's capital, which is an indicator of investor confidence in the firm's ability to generate returns. Ventech has already made several investments from its new fund, including Crocus (supplier of DRAM products and technologies), MXP4 (digital interactive music format), Skyrecon (security solutions software) and Viadeo (business social networking).
Prime Technology Ventures, announced a first closing on its third fund on €60M. The target of the fund is €150M. The early stage North-West European-oriented investor said that its existing LPs, such as Adams Street Partners, Feri, Parcom Ventures (the private equity arm of ING Group) and a number of family offices are on board.
Its first investment with the new money is in Vespro, the company behind Greetz, which offers printing on demand service for personalized greeting cards. Other recent new investments include the video clip advertising innnovator Adjustables, which we have covered, soc net startup Netdialog (also covered in these pages) and Palringo.
In the last 12 months the firm said it successfully exited investments in Global Collect, Human Inference, MarketXS, Tridion and Watermark, which explains the LP interest in the new fund, no doubt.
Posted at 08:12 AM | TrackBack | Permalink
September 16, 2007
Euro VC Fund News: New Italian and Finnish Early Stage Funds Attract Buyout Pros
Two new tech venture funds for Europe reveal some interesting contrarian activity among founding general partners.
It looks like a few buyout investment pros in Europe are leaving LP-money-magnet buyout funds to the less LP-favoured asset class: early stage European VC.
Read on to find out more about a few that prove that not all PE pros are in it for the fat management fees.
In Italy a brand new partnership called Innogest Capital has two founders that hail from the buyout sector: Marco Pinciroli, formerly of BC Partners, and Claudio Giuliano, formerly a senior associate at Carlyle Group [via realdeals.co.eu]. They’ve just closed an €80M fund for Italian tech ventures called Innogest. And in Finland, Contor Venture Partners has attracted one of the founding partners of Eqvitec.
It is positive news that Innogest actually closed a first time fund in Europe. Its portfolio firms include HT Srl (€1.5M raised) whose products and services are aimed at government agencies and law-enforcement to combat computer crime, and “TheBlogTV” with the same amount of capital.
You can get some insights into the tech zeitgeist in Northern Italy where this fund is active on Torino Wireless.
Finnish Contrarian Move
Pinciroli and Giuliano are not the only private equity pros to leave the money-heavy asset class. Jari Mieskonen is now a managing partner at Conor Venture, also a new Euro VC fund targeting the early stage.
He was a founding partner at Eqvitec, which has been moving away from the early stage roots, a result of growing its funds' size and adding mezzanine finance.
Conor is in fundraising mode on its first time fund, and has made a few investments that we’ve covered here: Aitos and digital billboard ads startup Virtual Advertisting Systems.
Expect to see a more active approach to building tech startups from Conor when it comes to things like mergers, acquisitions for growth, and building syndicates of investors from this team. He believes that European VC has been too passive in the past. He said: "We intend to look at merger opportunities sooner rather than later... We are about bringing in the resources a venture needs other than money."
A lot of VCs in Europe assert that they do more than hand over cash. There are indeed a few that have added value, based on what we see as outsiders. And we have our keyboard at the ready to point it out when we see it.
View Conor Venture Partners
View Innogest
Posted at 08:50 AM | TrackBack | Permalink
August 20, 2007
Euro VC Fund News - Eden Ventures and Neuhaus With Oman Fund
We know you need to know where VCs are investing, but it is also useful to keep up with who has new money to invest and what the investor types are up to.
UK early stage venture capital fund Eden Ventures announced that it had closed its new (and first) at £75M, which was above its target. It took them a good two years to get there after announcing an initial first closing.
Although it is a first-time fund, the team has been investing as business angels together for years. Eden's most recent claim to the top tier is its return on selling Cramer Systems to Amdocs.
We've got some of its portfolio firms like Truphone, VoiceVault, and Apertio in our news archives, but we also note some more recent Web 2ish investments like online user reviews site Revoo; Volutio, the company behind IKordo, which it says is a personal organizer, and online storage startup, Mobyko; and Exabre which recently launched The Filter, a music playlist site that exploits its recommendation tech.
Hamburg-based Neuhaus Partners is named to manage a €100M venture capital fund that will invest in Oman-based companies, reports the Times of Oman, and several other local press sources.
Posted at 06:15 AM | TrackBack | Permalink
June 13, 2007
VC World's Sad Secrets And Glossing EVCA Stats
Marc Andreessen's new blog has run a good three part series on VC that Jason Ball, an early stage investor in London says reveals one of the top 5 dirty little secrets of VC and a tip on who the best VCs are. We'll let you read his post to find out what it is.
How VCs Really Spend Their Time
And over on Nic Brisbourne's blog, who is also in London and part of a VC firm, picks apart fundraising reports from the European Venture Capital Association, which should really be called the European Buyout Association. He discusses one of the things that used to frustrate this blogger when covering Euro VC as a journalist, the EVCA stats were practically useless if your beat was technology and early stage investment.
Lies Damn Lies And Venture Statistics
Posted at 04:18 AM | TrackBack | Permalink
April 04, 2007
How To Make A Good VC Deal - Venture Hacks
A lot of readers have been asking for insights into raising venture capital and intelligence on who the better VCs are.
Our readers don't feel like being lunch.
Image source: killsometime.com
Preferred is something more like this ...
The whale shark feeds mainly on plankton, as opposed to small fish and surfing startup founders.
Image source: nationalgeographic.com
One response to those requests is to boost that line of questioning in our interviews. But we also are looking out for new information sources. The VC Ratings blog, which is written by experienced venture market journalists, has plans afoot to start delivering more in that line, we note.
In the meantime, one of our regular readers, a serial entrepreneur with a new-not-yet funded venture, wrote in hailing a new blog called Venture Hacks with topics like Term Sheet Hacks and Create a Board That Reflects the Ownership of the Company. It's co-creator describes it as a "tell all" site that helps entrepreneurs get on an even footing with their better-informed counterparts when negotiating an investment.
We checked it out and think that it's looking good. It's not been around long so the volume of posts is fairly shallow, though. One of the authors is an entrepreneur. The other is an "entrepreneur in residence" at Atlas Venture - a role that invovles scouting for investsments, advising the VC firm on investments and startups, and sometimes take an operational role at a portfolio company - so he is not exactly an outsider.
Nevertheless, so far, the tips, advice, and insider views are useful, or as our colleague wrote "as good as it gets".
We say that the comments are also well worth reading too.
View Venture Hacks
Posted at 07:10 AM | TrackBack | Permalink
March 27, 2007
Novintel and C-squared Raise VC Funding
CapMan made an investment in, and acquire 3i Group’s stake in, Finland-based custom market intelligence company Novintel. No financial terms were disclosed.
Meanwhile, over in the UK, C Squared raised £250,000 from The Capital Fund. C Squared is a publisher and event organizer for the advertising industry. It publishes Cream Magazine, M&M Europe and runs the Venice Festival of Media.
View - Novintel site
View - C Squared site
Posted at 07:24 AM | TrackBack | Permalink
March 14, 2007
OpenCoffee Geneva Genf Genève
(image starbucks.com)
David Rimer from Index Ventures sent us an email today to say that he's hosting a "completely open" event for entrepreneurs, techies, and investors types in Geneva on March 23rd, from 10 until 12 noon at the Starbucks de Rive.
He said the invitation is open to anyone interested in entrepreneurship -- "be they startups, freelancers, small business owners, inventors, VCs, or anybody who wants to be any of those things."
There is a sign up page meetup325
Posted at 02:24 PM | TrackBack | Permalink
Your Twenty Questions For Vinod Khosla
We know some of you have been wondering when other Silicon Valley venture investors, besides Sequoia, Oak, and Highland, will be boosting their European dealflow. You can ask Vinod Khosla yourselves, as the super-investor has agreed to respond to twenty questions from alarm:clock readers.
So go ahead, send us the questions that you would to ask. We think it is like being an NYU film student and getting to have coffee with Martin Scorsese.
Please email your questions, anonymously if you like, to comments@thealarmclock.com.
Here are some recent articles on Khosla Ventures:
Read - Alternative fuel is attracting venture capital, Thursday, February 02, 2006 (Wall Street Journal)
Read - Khosla Ventures' Range Fuels lands $76M grant (San Jose Business Journal)
Posted at 06:22 AM | TrackBack | Permalink
March 06, 2007
Earlybird Venture's Mathies On Exits, Oktoberfest Bashes, And Convergence Of Another Sort
Our last early stage VC interview with Sofinnova was a big hit so this week we have a German exemplar of the early stage sort, Earlybird Venture.
Like Sofinnova Partners, it tends to go in at the seed stage, but Earlybird is a much younger firm, just starting to raise its second large-sized fund (€200M) for the European market. Its last fund closed just as the boom became a bust, missing out on the "insane" valuations of that era, nevertheless it has since managed to accompany several of its startups to the stock market delivering returns to its LPs and creating some new famous founders.
Rolf Mathies, Managing Partner, runs us through the firm's exits (more IPOs than trade sales), and he also delivers some advice on avoiding Blackberry-addicted board members and how Web 2.0 is already too old for this early stage investor.
There's only one area that this Rousseau-quoting venture capitalist is not so open about, how the firm sources investments. It's the only question we asked that he declined to answer. We'll keep trying to find the answer for you. In the meantime enjoy the interview.
Any air travel tips for fellow VCs and entrepreneurs that read the alarm:clock?
Well, we have three locations, Hamburg, Munich and Menlo Park -- we want to be close to the companies and help as well in the US -- so we are in the air a lot.
But as an early stage firm we limit the number of board seats we have in order to have time to spend with the firms. I recall board meetings with two board members being on the phone calling in from somewhere with bad connections, or in the middle of a security check at an airport, and being constantly under time pressure and stress.
Clearly this does not help the quality of the decision-making and it is no fun for others that have been present in person. My tip is beware of VC board members that always call in from somewhere and only answer e-mails in cryptic short hand from blackberries. Look at the numbers of boards they are sitting on. More than 6 usually is not helpful.
Do your partners gossip around the coffee machine (euro style) or is it the water cooler (US style)?
Although the quality of the beans in our US office does not match the Italian roast in Europe, we have been able to convert them to espresso talk
When Earlybird has a reason to celebrate, like when you floated Interhyp or sold Element 5 to Digital River, where do you go?
Coincidentally Interhyp floated the day we had our yearly company event at the Octoberfest in Munich... this created a bad hang-over the next day.
You have 13 women that work at Earlybird, only one is a partner and she is in the healthcare sector. Why aren't there more women in tech VC?
We are very glad that we added a woman, Gayathri Radhakrishnan [pictured right], this month in the Tech sector ! It is a well known fact in the public stock sector that woman are better investors (more brain, more gut, less macho) so my guess is this will change in the future.
Interhyp and Tipp24 are two Internet ventures that you backed and then floated. But we haven't seen you invest in any of the Xing.coms, Wikios, or DaWandas of the newfangled Web 2.0 world. Why not?
The last two years we have been focussing very much on our portfolio and on exits, not doing too many new deals. Our thinking is that once a sector is hot you better get out of that sector. It is too late for an early stage VC [such as Earlybird is].
We hear your fundraising for your second large-sized VC fund is going well. What did you differently than the myriad of funds that were raised around the same time circa 2000?
Although we missed the lucky exits at insane valuations in 2000 we focused our portfolio on profitability and capital efficiency.
Therefore with the help of our (patient) LP´s we could wait until the window for IPO´s was open, listing 6 companies across Europe (Tipp24, Interhyp, Wilex in Frankfurt, Noemalife in Milan, Esmetec in Switzerland, Entelos on Aim).
Now we have more companies that have been profitable for more than two years [that are] in preparation to list: Amaxa and Hemoteq.
Interhyp alone returned the fund close to 2x making a 40x return. These kind of returns are expected to be benchmarked with US early stage VC´s. High write-off ratio but high multiples.
Do you still like the idea of trans-Atlantic investing - will you do it in your next fund?
In the US there is a huge capital overhang. We have less deals and less talent in Europe but even lass capital creating a huge supply/demand imbalance. That’s the reason we focus on sourcing in Europe but some companies might relocate there headquartes to the US. As Alantos and BridgeCo in our portfolio [have done].
Early stage investors in Europe are few and far between. You've co-invested with Sofinnova a couple of times. It's our impression that there are not a lot of other true early stage investors for you to co-invest with. What's your view?
VC is a very people centric business, it takes time to build trust and have success together but we hope that more good funds will be established because lack of capital is the biggest problem in Europe.
US VCs are under the impression that Europe is under-served with venture capital. What do you think?
See above – it really is a fact
It is a great time for to be selling companies, or floating them, you should know. Tell us a bit about finding the exit. Is the IPO an exit at all?
The IPO´s of our profitable companies all have been partial exits with 20-30% secondary portion in the IPO creating true liquidity for us.
But IPO´s of emerging companies take some more patience at high public awareness (Esmertec).
Still, raising enough capital at ok valuations is the life-blood of our industry. Without efficient capital markets (as was the case in 2001-2003) then our business model does not work.
Do you ever use the so-called dual track, aiming for an IPO but being open to M&A offers at the same time?
Dual Track rarely works with young companies as the process is so different. If you are down the road with an IPO it is often too late for a trade sale buyer.
Some of our companies have been approached by buyers right before the IPO but the valuations they offered were too low and growth companies with great management have their reason to be a successful public company eventually buying others.
Not the large eat the small but the fast the slow..
What kind of companies are you going to be (hopefully) taking public in five years' time? In other words, what kind of tech companies are you looking for now - stage, technology, geography?
We are focussing on early stage tech companies. Tech being applied across all industries.
Convergence in big markets is the buzz word. Is a biotech company creating new ways to produce biofuel/bioreactors - it could be a Life Science company or a Tech company too -embedded systems software or communication. We look for entrepreneurs that create a paradigm shift in large markets.
An example of Earlybird's convergence thinking is its recent investment in Vital Sensors, which develops a wireless heart and vascular system using microsensors. The Hannover-founded company is now based in the US.
Do you have certain process that you undertake before and after making an investment in technology venture? Do you organize events for your portfolio firms to get together ?
We do have all of this but every portfolio company is very special and it is tough to standardize process in early stage. Ultimately all of our portfolios are relatively small, it makes sense to syndicate and collaborate with other VC´s. For example we organized with Sofinnova and others the European Research day.
What is a dealbreaker for Earlybird?
Technology innovation just because of innovation prodicing marginal customer benefit in small markets. In particular in Germany some techies don´t have the view of their potential customers
What should an entrepreneur do if he wants to meet one of Earlybird's partners to discuss a new venture?
Best is to outline his idea and his track record in a quick and focused e-mail to any partner .- Rousseau said “ sorry I have written you such a long letter – I had no time to write you a short one”. The best ideas are easy to understand if explained by a good founder and the impact is clear from the beginning.
Thank-you for the interview.
Posted at 08:22 PM | TrackBack | Permalink
February 26, 2007
French VC Schmitt From Sofinnova Partners' On Early Stage And Jeroboam Logistics
Today we have a good Q&A with Jean Schmitt, managing partner of Paris-based Sofinnova Partners. He gave us a surprising amount of detail on how Sofinnova invests, where and why, the things it does to help entrepreneurs, and what will kill a tech deal.
The Q&A also reveals that Sofinnova isn't cheap when it comes to celebrating - it's the jumbo 3l Jeraboam-size champagne for celebrations. But you'll have to contact Schmitt yourselves to get the address of the most fantastic and unusual restaurants in Paris -- that's one tip he is not giving away.
The French venture firm is an early stage investor in European tech and life science company. Schmitt is one of its partners that focus on tech deals.
You have investments in Blyk, Accent, and Inside Contactless, located in Finland, Italy and Southern France, respectively -- which means a lot of air travel. Which is your favourite airport in Europe and do you have any tips about travel?
You are right, lots of travel and sometimes it’s simply insane! My favourite airport is the one that I have not visited yet - I love the feeling of being in a place I don't know, being late for check in, running with two pieces of hand-luggage, while I'm trying to insert a meeting on my Blackberry.
Seriously, we are investing in the best companies, wherever they are. For example, I'm also on the board of Esmertec in Switzerland and UPEK in Berkeley USA.
The trick is to structure the boards and the management teams early, have effective committees (compensation, audit, strategy) with clear responsibilities.
The second trick is to have a supportive family; I’m a former entrepreneur , it just looks like my previous life, nothing like an early retirement. [a:c euro Ed. Schmitt founded several companies and sold his last one, LP InfoWare, to Gemplus in 2000]
Do your partners gossip around the coffee machine (euro style) or is it the water cooler (US style)?
Coffee of course. But not just any type of coffee machine: an espresso machine, Italian style, since the arrival of two Italians in the Sofinnova team.
When Sofinnova has a reason to celebrate, like when you floated Vistaprint on NASDAQ or when Parrot floated on Eurolist at very healthy valuations, where do you book a table?
The central point for Sofinnova is to celebrate these successes with the entrepreneurs and their teams, celebrating our successful partnership with them.
We start by sending a gigantic bottle of champagne to the company --pretty complex logistics to deliver a Jeroboam from Europe, I can tell you!
We also mark occasions in time, key dates like our anniversary -- we are approaching our 35th: we have huge parties with many of our friends, at fantastic and unusual places in Paris. By the way, if you need a good restaurant address in Paris, let me know!
How do you source investments?
We read all sorts of business and scientific newspapers in order to detect new ideas at an early stage; we also attend and sponsor many professional conferences. We receive also around 850 unsolicited IT business plans per year from all sorts of sources.
Most importantly, we pick up our phones and get in touch with people - this is the way we found opportunities such as Varioptic or Sensitive Object.
Moreover the best deals are the ones you find after an extensive search in an area you believe is of interest. For example, our active interest in the area of « security and convenience for consumers” led to investments in UPEK or Inside Contactless.
Another example is Blyk which came from our search for an investment in both the sectors of mobile advertising and disruptive MVNOs: the Blyk approach of a free MNVO financed by advertising, alongside with an exceptional team led by Pekka Ala Pietila, former President of Nokia Mobile, made an excellent investment proposition.
Qosmos in the deep packet inspection, spin off from a French public lab is from the same family of long time searched for best of breed technology companies.
We've seen some pretty large-sized venture rounds in the past couple of months for semiconductor and some startups in the telecoms area. Is this healthy for the VC market?
Investments in Europe are still smaller in terms of total size of rounds and number of VCs per round than the ones in the US. Consequently, I believe that Europe is not "overheating".
Both in Europe and US, in order to build significant and global companies, we need to put a lot of money to work. Surely, fabless, semiconductor, telecom hardware companies require large funding to enter into the game.
Other companies, supposed to be more capital effective (such as web 2.0 companies), should raise less money...in theory.
I have the feeling this is a great time for VCs to be selling companies or floating them, but not so great to be investing, at least not as good as it was 12 to 18 months ago. Are valuations climbing in Europe? Is there more competition ?
Yes, there is some competition for investment in companies that are already well established - it is to be expected (and it is the case) that valuation will climb when companies reach later stages.
The surprising development is that some venture capitalists are becoming more inclined to go after later stage than early stage investments, even if they are marketing as early stage investor.
Our metrics show that seed and very early stage funding are getting more difficult. It might be even more difficult if you are not following the fashion. The big mistake is to follow fashions set by VCs, not by the market…
US VCs are under the impression that Europe is under-served with venture capital. What do you think?
Absolutely. Initially, when I joined Sofinnova end of 2001, I felt it great : so many great entrepreneurs and high level technologies, and so few VCs! Now, I tend to mitigate this way of thinking. We need to have lots of entrepreneurial VCs to become an industry, an asset class, not only a few success stories.
However, I am confident about the future; with time, LPs will figure out that European VCs are as or even more capital effective. Returns in Europe are spread among more funds, generating a safer overall return.
You are one of the few VCs that has invested in new human machine interface technologies, Sensitive Objects, what’s it like trying to grow one of these ventures and is finding OEMs a challeng?
Generally speaking, technology aims to make our life better, but sometimes it can definitively add too much complexity… I think that we need now to innovate more in order to increase ease of use of the technology, and reach a larger consensus and customer base.
We did a few investments into this direction, including Upek (fingerprint sensors), Wyplay (the “easy to use” media center you dream of for your living room) or Sensitive Object, provider of tactile user interfaces (touchscreens, wire free electric switches).
Sensitive Object is what I would call a “by the book” investment. We seeded the company on one basic patent and an outstanding researcher, out of the ESPCI in Paris (the school where Nobel Prize Pierre and Marie Curie use to teach and research). Then we turned this acoustic patent into a technology acoustic platform, and finally into products. The whole project is managed by a world class team and a strong board.
Today the company is selling thousands of clean keyboards for the medical industry. It's delivering its first breakthrough touchscreens (markedly cheaper for large displays, more reliable, brighter, etc.) and the first electric switches with no wires or batteries. The company has been fully funded by Sofinnova so far.
Concerning OEMs, there is no difficulty when the product is a great breakthrough as in the case of Sensitive Object or Varioptic [a liquid lens for cameraphones]…
UPEK was recently funded to expand into the US market. How is that going?
UPEK is a truly global company. General Management and hardware R&D are in the US, software R&D is in Prague, manufacturing in Singapore and sales are on all continents.
The company is now the leader in its market, which is the silicon based fingerprint subsystems and the consumer authentication software by fingerprint recognition.
It represents the type of company I like a lot: outstanding technology, truly global, on a relatively small, fragmented and very fast growing market. In addition, a lot of people get to enjoy the company's product under their fingers in new laptops from IBM Lenovo, Toshiba, Sony, Acer and more. By the way, if you don’t have one, buy a new laptop!
Finally, it is also a spin off from STMicroelectronics, which is another proof of maturity of the European venture market; we can spin off great companies from great large companies, where technologies are often hidden and management is well trained with true corporate values.
Since we liked it once, we did it again: one year later we spun off another company from STMicroelectronics, Accent, in Italy.
Do you have certain process that you undertake before and after making an investment in technology venture? Do you organize events or workshops for all your portfolio firms executives to get together ?
Yes, there are standard processes before investment; a strong due diligence is a support for a go/no go decision, but it is also the unique occasion to learn about the company upside down. We will never do that afterwards.
So before investment, we interview almost all employees in the company, we do extensive reviews of IP and technology, we work with the management on their strategy, including their future M&A strategy (on the buy side); we also introduce the companies to potential customers, just to check the company's ability to sell.
After the investment, the board organization and the installation of the right processes / reporting are critical. One would think that this is overkill: on the contrary I think that you don’t prepare a company for prime time early enough. It is not one year before an IPO that you start putting an ERP and the right financials systems, but almost from day one.
Regarding best practices sharing, we organize every year technology advisory boards, inviting key technology influencers and top managers, as well as our CEOs.
We also have our well-known CEO day, organized with Sofinnova Ventures, our US colleagues. The mix of CEOs from all continents, with different background being in life sciences or IT, and with some key executives from the industry is extremely rich. The “family” ambiance we are maintaining is also a key differentiator for Sofinnova.
What kind of companies are you looking for - stage, technology, geography? Which partner does what kind of deals ?
We are looking for Early stage investments (from seed to round B). We like to be lead or co lead investors, always rather active on the board. In terms of geography, we don’t care, if the company is great.
In the IT team, we are four partners, with particular areas of focus and interest, but open to invest in all domains. Olivier Protard and Olivier Sichel, former CEO of Wanadoo who just arrived at Sofinnova, are currently more focused on software, both on the technology, corporate and internet sides; Alain Rodermann and myself are now more focused on technology breakthrough and hardware, such as semi-conductors, materials, and more and more consumer sub-systems or systems. Mobile internet is taking off among all of us as well.
What is a dealbreaker for Sofinnova?
A dealbreaker is a great technology with no market, a great vision with no executable plan.
Sounds obvious, but looking at some startups out there, you would be surprised.
Surely dealbreakers are not either an incomplete team (we can always find complementary management-technology skills to build a first class team) or the finalisation of a technology development (engineers are able to solve almost any difficult technology issues). But there is no way to create a market.
What should an entrepreneur do if he wants to meet one of Sofinnova's partners to discuss a new venture?
He should simply send us his executive summary or even a quick email through our website; not need for a 100 pages business plan. He should just tell us what is new about his business or technology and who he is.
It is not necessary to explain us that the mobile internet market is exploding, that the operators need to grow their ARPU, and that Linux is the future… or to assault us with all the analysts’ quotes and graphs.
Just clear and simple. We will build the business plan together during the due diligence process with them if we are convinced of their potential.
Thanks for the interview
Posted at 07:36 PM | TrackBack | Permalink
January 29, 2007
Why Amadues' Hauser Thinks Euro VC Is Like Goldilocks And More (Interview)
At $100M, the UK organic displays company Plastic Logic raised this month one of the largest rounds of venture capital in Europe for some time. So we asked for an interview with Amadues Capital Partners' Hermann Hauser, an early investor in the company, to find out how the syndicate was built, which led to a discussion about his track record, and what kind of companies Amadeus is looking to invest in now, and why he thinks European venture is having a Goldilocks moment.
...Our report is below the jump.
On The Plastic Logic Syndicate
Plastic Logic did not use a corporate finance advisor to raise its $100M round. Hermann Hauser said that he brought in two US venture firms to Plastic Logic's equity, namely Oak Investment Partners and Tudor Investment Corporation. The two new investors acquired a 30 percent stake in the venture and are now the largest shareholders, followed by Amadeus.
The Amadeus co-founder tapped existing relationships that he has with partners at those firms to close the deal. For example, Oak co-invested with his firm on Virata, which floated and was then acquired Globespan, now called Conexant. "It generated $200M for an Oak fund," Hauser said.
It is that kind of track record that attracts venture industry peers to his portfolio, while others point to it as proof that valuable tech companies can be created in Europe.
For example, Benchmark Capital Europe general partner George Coelho said (during an interview with this reporter last year for an article printed in another publication):
"There are great local success stories. Look at Hermann Hauser who has built three billion dollar companies."
The three firms are ARM in Cambridge UK, Virata (now called Conexant) and Cambridge Silicon Radio (CSR).
A more recent exit, although not quite a billion dollar deal, was achieved when portfolio firm Solexa was acquired by Illumina for $600M. "That is a great valuation for a company that is pre-profit," said Hauser. (a:c euro notes that Illumina now has the top rank in Forbes 25 Fast Growing Technology companies published this month)
His firm first invested in Solexa, a genetic analysis equipment company, back in 2001 at a $40M valuation. We remember wondering if Solexa's backers would ever get their money back on their investment, even if its equipment was ultra-fast in comparison to rivals. During the tech downturn the hype had all gone out of DNA sequencing. Most investors were not buying.
And yet the UK company's backers pumped in another $7M when they merged it with NASDAQ-traded Lynx Therapeutics, Inc of Hayward, Calif. in a stock swap valued at the time of the deal in 2005 at $55 million. It turns out to have been a smart move.
With Plastic Logic, Hermann Hauser is hoping to exceed his past achievements.
"I believe, Plastic Logic could be a $10B company," said Hauser.
Where to invest now?
Hauser said Amadeus is looking for companies with disruptive architectures that exploit trends in the market like Web 2.0 and wireless adoption, pointing to examples from the past and current portfolio, to illustrate what he means by that statement.
- CSR had a single chip Bluetooth system [when its rivals were delivering 2-chip solutions],
- Icera Semiconductor has a software-defined baseband chip [making systems its embedded in more flexible and able to handle changes in industry standards], and
- Plastic Logic has innovative, simple - albeit slower- polymer semiconductor technology that is being applied to displays that can be produced at a disruptive price.
A Demo Of The Plastic Logic Display
The latter two are recent investments, others include CacheLogic, benefitting from a new wave of video, audio and Web 2.0 type applications, IPTV gearmker Edgeware in Sweden, and Liquavista which is commercializing disruptive display technology for mobilephones.
This kind of top down approach is one way Amadeus shapes dealflow, the other is to be open to working with "proven entrepreneurs" to be able to back their next generation ideas, he said.
On Being European ---
Hauser is positive on the European market right now. He told the a:c euro it is a "Goldilocks environment". In other words, it's not too hot and not too cold; it's not too hard, nor too soft. And it isn't too big, nor too small - it's just right.
He also said that Europe still has to "prove itself":
"We never had any problem with technology, but there has been an issue about the quality of management. But that has changed. In Amadeus I, 15 percent of the portfolio had an experienced entrepreneur founder. In Amadeus II, it was 47 percent and in current investments it is now running at 90 percent," said Hauser, adding "We can now attract top management from around the world."
Globalization is expanding the scope and increasing opportunity for European ventures. Hauser said:
"It is an absolute must to achieve in the lead market, whether it is in the US, Europe, or Asia. In the past the US was the hurdle, still is for PC oriented startups, but when it comes to other technologies, mobile and wireless, for example, Europe and Asia are the key markets."
Posted at 09:00 AM | TrackBack | Permalink
January 23, 2007
3i Finds The Mobile Sector Exit
We’ve posted here several times about the hazards of VC investment in the wireless and mobile sector. Over the past few years we’ve seen lots of money going in and very little coming out. But we noticed that 3i has been divesting often enough that the activity stood out in the flow of news we eyeball at the a:c euro.
We checked that impression with Go4Venture, the technology oriented corporate finance firm, whose data resources are better than ours. Xavier de Lecaros-Aquise, analyst at Go4Venture, wrote back: "It seems your hunches are correct. Not only has 3i been very successful in doing so … it turns out they have been the most active too.”
Here is a list of trade sales and IPOs that we requested from 3i
• Trade Sale: Bitfone to HP USdollars $160m
• Trade Sale: Mobile365 to Sybase USdollars $300m
• Trade Sale: Sychip to Murata USdollars $140m
• IPO: Eleksen GBP £18m
• Trade Sale: UbiNetics 3G business to CSR USdollars $48m
• Trade Sale: UbiNetics test and measurement business to Aeroflex GBP £46m
• Trade Sale: Xenicom to Andrew Corp USdollars $11.5m
• Trade Sale: Trigenix to Qualcomm euro €36m
• IPO: CSR euro €301m
• Trade Sale: Magic4 to Openwave euro €82.6m
• Trade Sale: K-Mobile to American Greetings
In the meantime, the sale of NordNav and Cambridge Positioning Systems to Cambridge Silicon Radio was announced. The NordNav deal gave 3i and InnovationsKapital "up to 8 times" their total investments in the company.
With all that in mind, the following Q&A with Ian Lobley, a senior partner on its VC team, should be of interest to some of you. The interview was done via email and telephone.
a:c euro – How did you manage to find the exit, when many of your peers haven’t?
IL – We’ve had a good run over many years. We’ve been investing in the market for 15 years, across the mobile value chain, investing in software, components, handsets, download platforms and operators….
a:c euro – So have some of your peers in the Nordics and France and they are not yet getting good-sized trade sales or IPOs.
IL: I think that some other investors had a narrower focus in certain areas of mobile, eg ringtones.
a:c euro - How do you interest the big name buyers, like HP, which acquired Bitfone?
IL: Trade sales don't happen in a vacuum - typically there are long term relationships preceding the deals. Helping to get those relationships for our portfolio is one thing we do, for example. Bitfone was an HP partner.
a:c euro – Which area delivered 3i the best returns ?
IL – Investments around the semiconductor area, CSR, Sychip, Ubinetics – have been a great area for us. But middleware and software to the handsets has been good too: Magic4, Trigenix, and Bitfone. Even content, K-mobile was a content company.
a:c euro – Your positive comments on middleware and content are surprising.
IL- It’s true that the most frustrating and challenging wireless model is anything where the operator is part of the value chain – especially marketing content via the operator, or where the success depends on getting into the handset. But even there we have startups that have done it and when they do it and overcome the initial barriers, they can do very well – Magic4 is a great example of this.
a:c euro – Where are you investing now?
IL – DiBcom, chip company for mobile TV where it is market leader; ScreenTonic, mobile ads – it's French and offers a full-set of tools and a platform for mobile phone advertising – its customers are the operators and advertisers; Nujira, which makes components to improve significantly the efficiency of wireless base stations. This allows dramatic reductions in power consumption and, for example makes, Wimax base stations work at unprecedented levels of efficiency.
a:c euro – We haven't heard of Nujira.
IL- It’s founders are ex-Symbionics which was acquired Cadence back in 1998. Nujira is delivering something that network equipment makers’ customers want : a cellular basestation that consumes less power and gives off less heat so meeting one of the operators’ environmental targets. You don’t need air conditioning in the basestation cabinet for one thing and the total cost of ownership is slashed. But it also enables a much smaller basestation, small enough to mount on a pole – so called remote radio heads. There is a press release about it here
a:c euro – What’s your approach to new mobile sector investments?
IL – we are trying to build on our success over 15 years; thoughtful and cautious!
a:c euro – thanks for the interview.
Posted at 09:57 AM | TrackBack | Permalink
January 22, 2007
Billions Of Reasons To Invest In Alt Energy And Dotcoms
Wonder why Silicon Valley VCs are eyeing cleantech? It could be the IPOs - few other areas areas for VC type investment are generating billion dollar valued companies.
Throughout 2005 to mid 2006, alt energy IPOs delivered four companies with market caps of greater than a billion dollars, namely REC (Norway), Q-Cells (Germany), Conergy (Germany), and Sunpower (us), according to Bankinvest New Energy Solutions, which is currently raising its second alt energy VC fund.
The a:c euro, which is not raising a new fund, adds that in the meantime France's Energies Nouvelles completed yet another multi-billion euro IPO on the Euronext.
And while we're on the topic of value creation, there's Betfair, which is a three billion dollar reason that VCs are interested in Internet ventures again. (See our earlier post Web 2.0 VC Dealmaking On The Upswing)
"Betfair is one of the largest Internet success stories that few of us in the US know much about. This is because Betfair is a UK-based company that operates the world’s largest online betting exchange and does not accept bets from US consumers...
So begins a recent post on Betfair in Startup Review. The article is worth reading for several reasons:
1) it provides details on money-in and money-out (more correctly said, partially out),
2) insight into how the founders grew the biz, and
3) it is a story about "how a non-VC funded Internet startup can win against a better-funded VC-backed start-up in the same market".
Read - Web 2.0 VC Dealmaking On The Upswing (a:c euro)
Link - Bankinvest Alt Energy Presentation (pdf)
Read - Betfair Case Study Target Niche And Expand (startup review blog)
Posted at 01:40 PM | TrackBack | Permalink
January 19, 2007
Rare Peak At Euro VC Exit Multiples
An unitended pun in the headline of this one. We managed to spell "peek" wrong. We don't often see exit multiples on European VC deals - typically the numbers are only revealed when a new VC fund is being raised. But a couple, both Nordic, by the way, crossed our screen this week.
NordNav (trade sale to Cambridge Silicon Radio) According to a statement issued by 3i, investors in NordNav stand to make a tidy return on their investment. InnovationsKapital and 3i expect to generate "up to 8 times" their total investment. 3i confirmed that since it co-led the first investment round in Nordnav in May 2005, it will generate a similar return to InnKap. The folks at InnovationsKapital also had a good exit on the Carmen Systems trade sale last year, a 9X return, according to its press materials.
TradeDoubler - VCratings did some digging and found that Arctic Ventures - a no longer operating Nordic VC firm - stands to generate a far greater than 10X multiple on its investment in TradeDoubler, which is an acquisition target right now. Apparently, the Arctic Ventures porfolio was rolled into Argnor (which seems to have been rolled into Braveheart and Argo).
Artic Ventures' current stake in TradeDoubler worth $90 million is three times the size of its original fund closing in 1999 ...
Read - Defunct Arctic Ventures profits from TradeDoubler sale (vcratings)
Read - Swedish GPS Startup ... (3i)
Read AOL's $900M Offer For Sweden's TradeDoubler (Techstocker)
Posted at 06:48 AM | Permalink
January 18, 2007
Europe's Tower Of Babelgum
Last year we were putting up posts pitting a European market-leader-wannabe versus a US wannabe, this year it's rivalling European startups, the latest being Babelgum versus Joost [via Nice Ventures and The Equity Kicker blogs], two early entrants aiming to offer P2P TV.
It brings to mind the observations of Danny Rimer of Index Ventures voiced at LeWeb3 a few weeks ago where he said that he sees a "danger" in Euro VCs funding too many startups all chasing the same opportunity. See Vpod.tv's excellent video of the VC panel via myblog link below.
Bascially Rimer was saying that it is worrisome enough that they are funding several competing ventures that want to be the European market leader in a particular application, but if they want to decent exits, it is especially foolhardy to back startups competing in the same country. (Rather than referring to the tower of Babylon and subsequent rivallries in the headline, maybe we should have referred to the medieval towers of Bologne and what they signified.)
It might be an issue for some VCs (depending on the size of their funds) -- and may signfiy some deterioration in the clubby nature of European dealmaking that we've been seeing in recent years -- but it is not stopping experienced founders with track records in their sectors from starting up new companies where they see opportunities.
Two of several areas that are proving to be magnets for serial entreprenurs are:
1) discounting the mobile network operator, e.g. FON, Rebtel, Jajah, and Truphone
2) delivering TV and video content over IP e.g. Joost/Venice Project, VideoJug, Kewego, TVBlob, and Babelgum.
Read - Broadband Television Not As Big As I Though (the equity kicker)
Read - Babelgum To Follow Long Tail Theory (niceventures blog)
Link LeWeb3 VC panel video (Ouriel myblog) Danny Rimer's comments are located at timestamp 12:29 and 18:44
Posted at 12:50 PM | TrackBack | Permalink
January 11, 2007
Esprit Won't Buy Dinner But Cook Serves Up More On Europe's VC Market
Why the US venture market could shrink by 35 percent in the coming years and what it takes to create a 10X return in Europe, are just some of the the opinions Simon Cook of Esprit Capital revealed in a Q&A by email with the a:c euro.
Every VC has his or her opinions, so why did we want to get Cook's? The main reason is that he was responsible for one of our most read posts and one of the most clicked links in the last quarter of 2006.
The post in question was a summary and analysis of Euro VC exits since the bubble burst. Readers from well beyond Europe hit the outlink on that one, suggesting that money-in (investments), which has been our focus at the a:c euro, is only half as interesting to our readers as money-out (exits).
That should not have surprised us, but it did, and has us thinking about our future focus. But that is another story. Below the jump, you'll find the results of our email exchanges: more details on European IPOs in 2006, how to read the tea leaves in trade sales statistics, insight into the way that Esprit works with other VCs and with founders, and, um, how the firm doesn’t pay for celebratory dinners...
a:c euro questions in bold text. In square brackets the a:c editor's notes.
Is it the coffee machine (Euro style) or water cooler (US style) that is networking central at Esprit?
We are big believers in an open plan office so we overhear what we are all working on every day – that's how we can put ideas and people together. For example, when two of the team were discussing buy.at [an affiliate marketing startup], Nic Brisbourne overheard and mentioned he had worked with the perfect chairman, Bruce McClaren of advertising.com fame. These days we have to read Nic's blog to find out what he's thinking!
VCs spend a lot of time in airports. Which is your favourite airport in Europe ?
Not sure of my favourite airport, but my favourite place to meet travellers is WAYN [an Esprit portfolio firm].
When Esprit has a reason to celebrate, like when Alphamosaic was acquired by Broadcom, or when Fillfactory was acquired by Cypress Semiconductor - where do you book a table?
Wherever the bankers and lawyers wish to take us - they usually pick up the bill.
Esprit's recent investment in Web 2.0 startup WAYN has been getting some positive reviews from blogging VCs, such as Fred Destin of Atlas and Brad Feld over in the US. Isn't that kind of unusual? Where is that notorious rivalry between VC firms?
Whilst we are competitive on deals with our European VC partners, we also work very closely with them, much in the same way the founding firms of US VCs have done. If we don't get involved in the first round then there is always the chance that another round might come up that we want to be part of. It therefore, makes good sense to respect each other over the long term. For example, Esprit led the series B for an Atlas company, Displaylink [formerly known as Newnham Research].
We haven't seen too many venture-backed IPOs in Europe and the UK in the past few months. What is the problem?
We have seen some very successful businesses float this year in Europe: 22 with market caps of greater than $100m including Parrot, Optos, Modelabs, Magix, Trolltech but these are spread across many local exchanges.
Too many exchanges in fact. We need to have a single platform for growth capital companies in Europe so that we create a robust investor and analyst base. We also need to ensure that the right type of companies float and, at the right time. This will ensure that IPO investors will see some positive results over time.
Too many companies IPO before they are ready and this will put investors off especially if the companies disappoint and are too immature to have floated.
When it comes to M&A, the activity has been somewhat subdued, especially if you look at the chip sector. In a recent interview with this reporter, Stuart Paterson of Scottish Equity Partners said that "relative to the number of [chip] companies being financed, we should see 5 to 10 exits a year, for the ecosystem to be self-sustaining..." Do you agree?
It's not really measured by the number of exits but by cash returns. CSR may have returned over a billion dollars to its investors who stayed in and sold at the peak.
Those profits can be reinvested in dozens of start-ups and still leave good profits for LPs. There have been about 100 semiconductor exits in last three years with about 25% in Europe vs around 300-400 investments (again 25% in Europe), so it looks pretty healthy.
The iPod has proven that the PC form factor isn't the way forward and we believe more technology will be packaged as chips in future rather than sold as software.
US venture capital firms are under the impression that European tech ventures are "underserved" - ie. the amount of capital and resources available to support innovative companies is not yet at a critical mass. What do you think?
It is true that the European market is much smaller than the $24b US VC market. But a $4b market [the amount recently raised by European venture funds] isn't subscale; we are in the growth phase as the market comes into its own like US venture did in the 90s.
The fact is, we are now building global businesses in Europe and as Europe has generated about one-third of the best exits in the last few years with one-sixteenth of the capital, we are doing something right.
The average $100m+ exit in Europe and US in 2004/2005 was $251m, but only took $40m [of VC money] in Europe versus $70m in the US, so we are capital efficient.
Based on exit statistics and capital invested, I hypothesize that Europe can grow 35% and US should shrink 35%.
Your investment in Fillfactory was one of two greater-than-10X semiconductor VC exits for Europe since the bubble burst. Tell us a bit about it?
Fillfactory was a spin out of about ten engineers and scientists from IMEC, a leading micro electronics research centre in Belgium. The team's expertise was in the then fast growing CMOS sensor arena, and at Fillfactory they applied this to image sensors in applications ranging from producing the world's first high resolution professional digital camera, wafer-scale sensors for mammography, and space qualified image sensors.
This high-end business was profitable from the outset, unusual for a high tech start-up. CEO Luc de Mey was a very strong leader of Fillfactory and Esprit's contribution as one of the two VC board members was as a sounding board and mentor as well as facilitating the sale process.
And how's your portfolio right now?
We are very excited by a number of the next generation semiconductor businesses we have backed this past year including Siconnect, Displaylink [formerly known as Newnham Research], Lime, Xanadu and XMOS. It takes a number of years to build great companies though, so it's too early to say yet how successful they will be.
How do you source investments?
We spend a lot of time researching growth sectors and looking for successful companies in Europe who we then approach and explain the merits of taking on board an equity partner to. We also build a lot of new companies through seed investments with key institutions such as Cambridge Consultants, Qinetic, Universities etc.
What kind of companies are you looking for?
Esprit can invest at any stage but we want to back global companies which will require a minimum of about $10m of funding over time. We cover all areas of IT, semiconductors, software, new media and telecoms, plus a focus on healthcare such as medtech and diagnostics. We invest across Europe. We always take a board seat and work closely with our portfolio companies, often with a syndicate partner.
Esprit's Bob Hook (left to right) Sanjeev Sakar, Nic Brisbourne, Catrina Holme
You just won a tender put out by Cambridge Consultants (CCL) to manage its spinout activity after a four year gap. Its two biggest spinoff success stories are Cambridge Silicon Radio (CSR) and Alphamosaic. Is there a historical connection between the two organizations?
CCL has created many successful spin-offs in the past, but did this on an ad hoc basis with various investors. After a few years of inactivity, CCL are now focused on a more formal process of start-up creation and we are proud to be their exclusive partner.
The Esprit team has many connections to CCL spinoffs: Bob Hook was involved in the spin-out of Xaar; Alan Duncan with Alphamosaic and myself with CSR. CCL was also an original investor with Bob Hook when he started his first VC fund in 1985.
What should an entrepreneur do if he wants to meet one of Esprit Capital's partners to discuss a new venture?
Send an email; pick up the phone. We love to meet entrepreneurs of all ages but they must be ambitious!
Do you have a certain process that you undertake before and after making an investment in a technology venture?
We carry out a comprehensive due diligence process before we invest, as we have a duty to do so. Its other peoples' money that we are investing and therefore, we have to be careful and make solid investments. However, if it's a sector we have researched before and have great knowledge of we can move very quickly. We use a network of industry execs to help us and speed the process up.
Do you organize events or workshops for all your portfolio firms executives to get together?
We do hold regular workshops for our portfolio and other companies. Recently, we held an event that looked at new ways to monetize web traffic through performance based models.
The Equity Kicker Nic Brisbourne’s blog
Relevant a:c euro Links
Cook Shows The a :c euro The Exit
Newnham Connects With VCs
Hot Betas: NAVX, WAYN And…
Posted at 10:43 AM | TrackBack | Permalink
November 29, 2006
Esprit's Simon Cook Shows The a:c euro The Exit(s)
The other day we wrote that we wanted to hear more about "money out" as opposed to "money in" from the tech sector here.
Well, we got a response from Simon Cook (image right), the CEO of Esprit Capital Partners, the London-based company that was formed in July 2006 from the merger of Prelude Ventures and Cazenove Private Equity.
He sent us his presentation from the Super Investor conference, which delivers what we'd been looking for (we have a link for readers to download it below).
New Media / eCommerce Exits
Chip Sector Exits
The company logos in the images above and below are VC-backed exits, not investments, achieved since the bubble burst. The ones circled in red are billion euro companies now. At the risk of stating the obvious, semiconductors and new media/ecommerce companies are finding the exit and that's why VCs continue to invest with confidence in those areas.
There is a series of slides within the presentation that Simon Cook calls the Countdown - basically a detailed comparison between European and US venture performance since the bubble burst. It's a bit more witty than your usual investor confab presentation and it shows that with the exception of Google, European ventures are not doing too badly on the exit front.
The Message Is That European VCs Are Duking It Out With US VC For Limited Partner Commitments
Link - Celebrating European Venture Capital Success Presentation (pdf file at Esprit)
Posted at 03:32 PM | TrackBack | Permalink
November 15, 2006
Nordic VC Backs Polar Rose's Visual Search Innovation
Malmö, Sweden-based Polar Rose has raised a nice sized Series A round of $5.1 m (€4 m, SEK 37 m) from Nordic Venture Partners to make a business out of its facial recognition technology applied to searching and identifying images on the Web.
Details on the firm's commercial service are sketchy. But knowing Nordic Venture Partners from interviews over the years and recent conversations with its partners, the company is meant to make money and it is being built for a global market.
What we know so far is that it's software can do some three-dimensional processing of images (3D extrusion) and applies cutting-edge facial recognition algorithms. This combined with labeling and input from users - to sort and add context to images -- is the basis of the service.
Here's what Polar Rose tells potential users:
Polar Rose works with any public photo. No matter if you're using flickr, 23, Kodak gallery, or any other website, Polar Rose lets you discover people in pictures. Learn who people are, and help improve results by tagging pictures together with other users.
Read - Euro Rivals For Riya (a:c euro)
Posted at 06:29 AM | TrackBack | Permalink
November 09, 2006
One More Euro VC That Blogs
Paul Jozefak, who is a partner at Hamburg-based Neuhaus Partners has a blog now and it is called Babbling VC, Random thoughts of a Slovak-American VC in Germany. It is new, but there are some good posts in there for entrepreneurs and the venture community to dig into.
He joins the slow growing list of European VCs that are already at it, listed below.
The Equity Kicker (Nic Brisbourne, Esprit)
Fred Destin (Atlas Venture)
Technofile By Max Bleyleben (Kennet)
Christian Leybold (BV Capital)
Techbytes by Jason Ball (London Seed Capital)
If we missed anyone, drop us an email.
Posted at 09:31 AM | TrackBack | Permalink
November 06, 2006
Former Wanadoo Chief Joins Sofinnova Partners
Europe's venture firms are bulking up with new additions from industry. Accel Partners and Fidelity Ventures have been expanding, and now Sofinnova Partners has announced that Olivier Sichel, the former Chairman and CEO of Wanadoo (France Telecom group) has been named as partner.
Interestingly, Sichel said he made the move from industry to venture because he believes that the venture capital sector is about to undergo a new round of restructuring similar to what telecoms went through ten years ago.
Sichel said he joined Sofinnova Partners because of the "quality of its teams, its broad field of activity and its European leadership .... When I joined the telecom industry ten years ago, it was about to undergo a major restructuring. I’m convinced today that venture capital will undergo a similar transformation over the next decade.”
On Sofinnova's side, Olivier Protard, Managing Partner said:
“[Sichel's] nomination confirms our strategy of putting senior partners with solid operational experience at the service of the companies we invest in.”
The 39 year old built up an an ecommerce business unit within France Telecom back in the late nineties, and then left to become chairman of publicly traded Wanadoo where he restructured the directories and Interent services company.
When it merged with with France Telecom in a mixed public offer in April 2004, the company’s operating profit had quadrupled and its value increased to €13 billion from about €6.5B when he joined.
Posted at 07:39 AM | TrackBack | Permalink
November 03, 2006
Flickr Tells VCs Who's Talking To Who
Paul Fisher, a London-based corporate finance adviser who blogs, points out at the end of a post on user generated content that VCs don't have to ask founders "who else are you talking to", they just have to go to Flickr.
We checked to see if he's right and ran a couple of searches in Flickr for BV Capital, Atlas Venture, Esprit, 3i, and Accel, some of the VCs that are into Internet investing at the moment and therefore more likely to use or appear in an online photo sharing site.
Sure enough, you can get a pretty good idea of who's been talking to who. A bit of digging is required though to find out the context and which startups are involved. We doubt that anyone is that relentless in their search for the information edge to do the digging. But it is an interesting development.
Besides, visiting a VC's office doesn't mean a lot - they are always boasting about dealflow, meeting hundreds of entrepreneurs a year for every one deal they close. One told me last week his team of four looks at 500 companies a year. That's a lot - we get dizzy when the number of companies gets anywhere near that level and we're just covering the news, not considering making an investment.
Read - Islandoos and don'ts for sucessful social software (Paul Fisher's blog)
Posted at 03:23 PM | TrackBack | Permalink
November 01, 2006
Irish Startup With Way To Pay Before You Buy Online To Save
Atlas and Benchmark have teamed up to back a €20M expansion round for 3V Transactions, an Irish startup that's developed a prepaid card scheme for consumers.
3V was founded in Dublin in 2004 to target what it says is a €500B European prepaid market and was until recently majority owned by Alphyra, the Irish payment processing company. Update: And its tech is patented, according to Fred Destin of Atlas Ventures (blog link below).
Why a startup has an opportunity to do this kind of thing and not an established credit card, or traveller's cheque company, or even a wily mobilephone company, just shows how complacent these industries have become.
Yes, Visa is working with 3V on this one, but as we see it, Visa will not be getting the lion's share of the opportunity. It will be the startup, an Irish bank (permanent tsb), as well as Alphyra.
Note that Alphyra, is also in the Benchmark portfolio. The venture firm financed an MBO back in 2003. (Benchmark may have become famous for an early stage investment in eBay but in Europe, the firm does a lot of growth, late stage, and buyout investing. )
So Benchmark benefits twice from incumbents not connecting with a ball that has been in their court for over six years when online shopping started to grow and Europe's online payment startups were ailing and failing.
We can see this being popular for buying cheap flight tickets online. We've been flying Easyjet lately - the alarm:clock network is a thrifty organization. Since Easyjet breaks out the amount of the fees charged you can clearly see who's gouging.
For a ticket from Basel to Paris return, we pay an additonal 20 percent of the ticket price - due to a minimum transaction fee and an additional percentage of the purchase price - just for the privilege and convenience of using MasterCard. Debit cards are the cheapest option with Easyjet but it doesn't have many signed on yet.
We definitely think there's opportunities to undercut the fees that credit card companies charge, but the alternatives have to be easy, transparent, and widely accepted.
Read - 3V secures E20m in funding for expansion (Business World)
Read - 3V Newest From (Fred Destin blog Atlas Ventures)
Posted at 04:39 PM | TrackBack | Permalink
Ekahau's Location-Enabled Wireless Play Raises $16M
Finland's Ekahau has raised $16M to expand its wireless sensor network solutions business from strategic and VC investors. The company was founded in 2000, and has developed a range of software and hardware to support tracking and finding of items inside a WiFi network.
From what we can see, it has made some headway in the healthcare market. We figure it helps emergency room personnel answer the question: where did the morning crew leave the darned defibrillator?
Read - Ekahau Secures $16 Million in Additional Funding (press rel.)
Posted at 09:44 AM | TrackBack | Permalink
Funding The Burn : Heavily Capitalized European Startups
Now there's a headline we haven't been able to write for a good five years. That is because during the bubble European VCs heavily funded some incredibly weak cash-burning startups and then reacted in subsequent years by doing what has come to be called drip-feeding the venture. (They also did that pre-bubble but for a different reason, lack of capital.)
But things are changing for the better, and without going into the reasons for that, let'slook at what corporate finance boutique Go4Venture has to say this morning in its monthly newsletter.
Go4Venture Shows That This Year VC Investment Is Above 2005 and 2004 Levels.
Go4Venture's analysts provide deal profiles for InsideContactless, Rebtel, Operax, concluding that they are heavily capitalized now. Some quotes:
With this round, Inside Contactless has raised in excess of EUR 50 million, making it part of the fairly small league of heavily capitalised European VC-based companies. ...
And this:
Since its start in 2000, Operax has been through a number of financing rounds raising a total of EUR 30 million, which makes it a substantial investment by European standards. ...
And that:
By amassing $20 million in a Series A within 9 months of starting, Rebtel Networks must be establishing a new record for a European startup – or pretty close. But then again it demonstrates that in internet and mobile services VCs value momentum, particularly for companies set up by successful entrepreneurs.
Go4Venture didn't mention them because it was only looking at September but you could also put Icera Semiconductor ($60M+) and Sulake Labs (which is at $137M and counting) in the list too.
The biggest difference between then and now, is that it's not the "A" round (Rebtel excepted) that gets the big money, it's the B and C rounds, where there is revenue growth, evidence of penetration of a global market, and management is strong.
Posted at 09:42 AM | TrackBack | Permalink
Mobilephone Software Firm Picsel Nabs £25M
The UK's Picsel Technologies, a software company that develops a suite of products to create, publish, and display content on mobilephones, has just raised £25M from undisclosed investors, we learned today reading Library House' weekly free newsletter, which also said Picsel's sales are up to £13M now.
According to its website, Picsel secured first round funding in 2001 totalling $11m from SOFTBANK Europe Ventures and BancBoston Capital. It raised a second round a year later of $6m from a consortium of Japanese investors, including Yasuda Enterprise, CSK Ventures, Mizuho Bank and the Morito family.
More recently, the firms says, Picsel secured a large scale non-equity loan agreement with Malaysia Debt Ventures Berhad (MDV), the finance arm of the Malaysian Government.
It was co-founded and is led today by Imran Khand in 1998 after he founded two other undisclosed ventures. Before that he was involved in economic development activities with the Scottish government.
Read LibraryHouse Newsletter Issue 33
Posted at 09:14 AM | TrackBack | Permalink
October 26, 2006
Accel Enters Alternate Reality
Mind Candy,a UK based interactive media startup that produces alternate reality games, has raised $7 million from new investor Accel Partners which joins existing investors Index Ventures and NewMedia Spark, less than a year since raising a $3M first round. According to CNET, it had also raised at least $1.5M prior to that in an angel round.
The cause of the anticipated cash burn is that Mind Candy is launching a "major expansion" adding products to be announced in early 2007.
Mind Candy runs real world treasure hunts. The clues are printed on cards (that people pay for) and the search is augmented by events, websites, text messages, TV, and print. As for its business model, there are a few clues about how it could generate sales -but we haven't solved that mystery yet. One thing we know is that It is not using a sponsorship model, like some of the other alternate reality games we've read about.
Its game clues sound pretty cerebral. Check out this excerpt from an interview by Rick_32 Footsteps_Healy with folks from MindCandy :
32: There are four cards as yet unsolved. A question on each:On Riemann - Some number theorists have conjectured that Riemann's General Hypothesis (the prob