Index Looks Smart (Again)

Index Ventures has turned its $5 million investment in social-networking/music site Last.fm into a $280 million acquisition by CBS — yet another proof point that the European firm is knocking the cover off the ball.

Index did well on its last two funds, recording returns of more than 30% for each vehicle, according to data from the California Public Employees’ Retirement System as of December, 2006.

The firm’s biggest success came two years ago when its investment in Skype Technologies paid off. Index invested in the IP-telephony company’s $18.8 million second round in March 2005, then eBay Inc. bought the Luxembourg-based company for $2.5 billion in cash seven months later.

Last year, the firm also recorded five exits, which included three public offerings and two acquisitions, according to Thomson Financial (publisher of PEHub.com):

• Drug discovery company SGX Pharmaceuticals (Nasdaq: SGXP) went public after it raised more than $100 million in VC financing from Index, Prospect Venture Partners, Scale Venture Partners and other investors. SGX raised $24 million in its IPO in February 2006.

• PDA software maker Trolltech (OSL: TROLL) went public in July on the Oslo Stock Exchange, collecting $20 million. The Olso-based company had raised more than $20 million from Index and other European VCs.

• Urology drug company BioXell (SWF: BXLN) raised about $47 million in its IPO in September on the Swiss Exchange The Milan-based company had raised morethan $80 million in VC funding from Index, AlpInvest Partners, MPM Capital, TVM Capital and other investors.

• In May, the fiber-optic developer Beam Express, which had raised $21 million from VCs, was sold for an undisclosed sum. The Swiss startup was a spinoff from the Swiss Institute of Technology.

• Drug discovery company CareX, which had raised $40 million in VC funding, was bought for an undisclosed sum.

Index also sold a 22% stake in online betting company Betfair worth nearly $643 million to Softbank in February.

No wonder the firm was able to close a $456 million fourth fund in record time this past February.