Expect most of the money to be invested into European tech startups
FORTUNE — Index Ventures has raised €350 million for its sixth early-stage venture capital fund. Expect most of the money to be invested into European tech startups, with the remainder targeted at Israel and the United States.
“One surprise on our last fund was that we did a much higher percentage of deals in the U.S. than we had expected,” says Mike Volpi, one of Index’s San Francisco-based partners. “Our target is one-third U.S., but we were up at around 40%. I think it reflects the richness of companies, particularly tech companies, in the U.S. market over the past few years. There also were a larger number of things in New York than we had expected.”
When Index raised its fifth early-stage fund in the summer of 2009, its goal was to invest in tech, life sciences and cleantech companies. The firm soon decided, however, that life sciences and tech investing weren’t compatible out of the same fund — leading it to raise a €150 million life sciences-only vehicle earlier this year. This came shortly after Index also raised a dedicated fund for growth-stage investments, whose portfolio already includes such companies as Etsy, Dropbox and Nasty Gal.
As for cleantech,Volpi says that Index didn’t take long to sour on the sector. “We looked at a lot of deals but didn’t think that many had the same potential as tech deals, because they relied too much on subsidies. We did a couple, including a tire recycling company, but I wouldn’t say that it’s still a focus.”
Volpi adds that Index already has begun investing the new vehicle, and that he hopes many of the companies someday will be able to go public in London. It’s a theme first broached in a blog post last month by Index partner Neil Rimer:
Of course, that blog post came before Facebook’s FB IPO debacle. Not a single company has gone public in the U.S. or Europe since that time, with Volpi suggesting that the flaccid post-IPO performances of Groupon GRPN and Zynga ZNGA also may have contributed to the slowdown.
“Facebook may have made people think a bit more before buying into an IPO, but I don’t believe the window is closed… For Europe to get to where Neil was writing about, however, we need the U.S. market to be reinvigorated so that Europeans see what they’re missing.”
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