When Index Ventures, a Geneva, Switzerland-based VC firm, added a dozen limited partners and closed its fourth fund at $456 million last week General Partner David Rimer said it had been done in a “record time for a Euro VC fund.”
It’s easy to understand why. The firm’s second fund, which raised $303 million in 2001, recorded a 35% IRR, according to CalPERS, which is an investor in Index through Grove Street Advisors. Fund III, which raised $397 million in 2004, recorded a 32% IRR. Co-founder and General Partner Danny Rimer (who is David’s brother) says the firm finished committing all of Fund III. “Index was founded 11 years ago with the idea that Europe equated to Silicon Valley of the mid-70s,” Rimer says. “Europe is now coming into its own and there are few players other than us that are as serious about the European investment arena.”
Index’s spate of recent exits have won it favorable comparison to U.S. firms. Some have called the firm the “Kleiner Perkins Caufield & Byers of Europe” for its returns.
But Index wasn’t the only firm to enjoy success in Europe last year. In 2006, 91 VC-backed European companies went public, up from 69 in 2005 and the most since 2000, according to Dow Jones VentureOne.
Maybe something is going on there.
I’m not anxious to look too deeply into it though. U.S. journalists periodically wax optimistic on the European tech scene. They’ll pull examples out of how the area is finally shaking its anti-entrepreneurial reputation (Skype) or how Europe is cutting edge because of its high mobile phone usage levels (Symbian). Then there’s the discussion of how Sarbanes-Oxley is killing private companies and London’s Alternative Investment Market is going to be the new Nasdaq. The story almost writes itself into a guaranteed yawnfest.
Besides, there’s already an informational schmorgesborg inside the pages of the European Venture Capital Journal, a sister publication to PEHub.com.
But maybe there is a region or trend here that’s worth pulling out and investigating in detail for the U.S. audience.
Is the Czech Republic the new San Mateo, a veritable ground zero for software development? What about the analog semiconductor scene in Eastern Block countries? Are the new issues on European exchanges too under-covered by analysts to give them any aftermarket liquidity?
If Index is knocking the cover off the ball in Europe, why haven’t more U.S. firms taken their game into Index’s backyard?