Accel’s Kevin Comolli on New Europe Fund & Venture Scene: Q&A

Accel Partners may be best known as a Silicon Valley venture investor, but increasingly it’s finding deal flow an ocean away.

Today, the firm announced that it has closed a $475 million fund, Accel London IV, that will focus on early and growth-stage companies in Europe and Israel. The fund will invest in consumer Internet, big data, cloud computing, software-as-a-service and mobile businesses.

Partners described the fund as “significantly oversubscribed,” noting that it closed in just eight weeks. Originally, Accel set out to raise a $450 million fund, partner Kevin Comolli told peHUB, but bumped up the number slightly due to demand.

The new fund-raising follows several exits from Accel London’s prior funds, including travel site Kakak (which went public last year and was acquired by Priceline for $1.8 billiion) , social game developer Playfish (acquired by EA for about $300 million) and analytics provider Qlik Technologies (currently public and valued over $2 billion). Its current portfolio includes including fast-growing gaming developers Rovio and Supercell, online credit provider Wonga, and document management software developer Alfresco.

Looking ahead, Comolli says the fund will invest across stages but will focus primarily on early stage, which, as he details in the following Q&A, is a space he’s feeling very bullish about.

Q: How do valuations of European startups compare to what you see in Silicon Valley?

The competitive dynamics in Europe is much different. There are fewer venture funds, so I think the competitive dynamics work in our favor here to keep valuations from being auctioned up. You get the hot deal syndrome less often here and the valuations tend to be a little lower (though you do see competitive deals).

Q: How would you describe the supply of venture capital in Europe? Are there too few funds? Too many?

I would say there is a good balance, though there is a perception by some that there is a shortage. For this fund, 65% of our capital came from top-tier U.S. investors who know the asset class inside and out, so that’s a good proof point that venture capital firms that are performing will get funded. And if new startups are performing and have a compelling value proposition, there’s capital.

Q: You can start a technology company virtually anywhere. But to what extent can you scale a company anywhere, and to what extent does one need a U.S. presence?

Our primary business is to build global category-defining companies using indigenous European and Israeli technology. Sometimes they will not scale in the location they started. For instance in Israel, typically a critical mass of executive talent will eventually go somewhere like the U.S. In another example, one of our portfolio companies, QlikTech, started in Sweden and later listed on Nasdaq. Product development is still in Sweden, but the CEO and a critical mass of senior management are in the U.S.

Q: A number of your European portfolio companies have carried out exits in the U.S., either through acquisitions or public offerings. Do you expect exit opportunities will continue to come mostly from outside Europe?

Given that the majority of strategic incumbents and acquirers are in the U.S. and more and more are coming from Asia, those outcomes are likely for M&A, and trade sales are likely to be non-European. As far as IPOs go, we do have a preference for the U.S. markets for depth and liquidity and quality of research coverage. But we look at the options. For QlikTech, when we were taking it public, we looked at Stockholm, London and New York exchanges. We looked at the pros and cons and decided Nasdaq would be the best option, and it’s worked out very well.

Q: What are the prospects for really large, industry-disrupting Internet and software companies coming out of Europe?

If you look at QlikTech, that’s an example of a company out of Lund, Sweden that now has market cap over $2 billion. The question when we first came over here was: Can Europe originate a billion dollar outcome technology company? There’s enough evidence that yes, you can produce the big outcomes. For instance SuperCell (a Finnish game developer that raised a $12 million round led by Accel in 2011) is the fastest-growing company in terms of revenue growth and profit that we’ve ever seen. So we’re more bullish than ever.

Photo courtesy of Accel Partners.


  • Why are there fewer venture funds in Europe?

  • The U.S has a larger and more mature venture ecosystem, so it has a more funds with more capital to put to work.

  • Europe also doesn’t have as well a developed entrepreneurial community. People don’t readily think to themselves: heck, I’ll start a company. I am curious whether Accel thinks it is at the start of a change in entrepreneurial sentiment. There are startup hubs in Berlin and London that are gaining steam.

  • I would argue the exit environment is better in the US than in Europe, with more corporate acquirers available. I’m curious to see how well Accel’s many European investments do when it comes time for liquidity.

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