Venture Capital

Atlas are leaving, but there is money in Europe

By January 20, 2010 January 24th, 2010 6 Comments

Many of you will have seen yesterday’s news that Atlas Ventures is, in the words of Techcrunch, ‘upping sticks and moving to Boston’.  Atlas has been a mainstay of the European venture scene since it really began in the mid-1990s and we have co-invested with them on a number of occasions.  They will be missed.  The truth of the matter is that the venture capital industry in Europe lacks critical mass and their departure doesn’t help.

There is, however, still money coming into the market.  We recently announced the first close of DFJ Esprit III, and other venture funds who have recently raised include Fidelity Europe and Doughty Hanson (I believe, although I can’t find a press release).  Moreover, prior to the Lehmans collapse in autumn 2008 there were post bubble record inflows into the European venture industry.

Active funds in this region with a bit of scale now include DFJ Esprit, Index, Accel, Balderton, Eden Ventures, Fidelity, Doughty Hanson, Wellington, ProFounders, Kennet, Highland, GIMV, Sofinnova, Wheb, Frog Capital, Target, Endeavour, Northzone, Iris, SEP, Amadeus and Advent.  (Apologies for any I’ve missed, please correct me in the comments.)

So, whilst it would be great for everyone if there was more money in the market, cash is being deployed and companies are getting funded.  I would characterise this as a difficult period rather than a crisis.  Remember also that the European startup scene is still young, and that building an ecosystem takes a long time.  And it takes patience.

It is also worth remembering that the building blocks for success in Europe are in place – strong technology, a growing entrepreneurial culture, a rudimentary financial infrastructure and a strong tailwind in favour of small companies as the pace of innovation increases.

Finally, a quick note on scaling VC funds.  As Fred notes in his post Moving to Boston venture teams work best when they are all in one location.  We share that philosophy at DFJ Esprit, and seek to marry it with strong ties and networks in Silicon Valley and around the world.  Like all of the sixteen funds around the world in the DFJ network, we raise our own separate funds which we manage as an independent partnership, but on top of that we operate as part of the DFJ global network of partners.  We all get together regularly in person, on the phone and via web and email groups, and as an added incentive to help each other a portion of all our economics are pooled and shared.  Via this model of affiliated funds we have global scale (over 600 portfolio companies, over $6bn under management, partners in over 30 cities) combined with the power and speed of locally managed partnerships.

Update: As Will Cardwell points out in the comments Eqvitec, Nexit, Creandum, Prime, Early Bird, Via, and Sunstone are also important and active contributors to the European venture industry

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