Index Ventures, the London-based venture capital firm best known for investing in LoveFilm and Skype, has defied the eurozone debt crisis to launch a €500 ($689.4/£429.03) million fund to invest in late-stage startups in Europe.
The fundraising caps an impressive 12 months for Index, which has benefited handsomely from big money exits including Amazon’s £200 ($321.38) million buyout of LoveFilm and the $160 (£99.57) million (£99 ($159.09) million) public offering of patent firm RPX.
Bernard Dallé, a partner at Index, said the growth fund will help late-stage private companies “bridge the gap” between funding rounds and a share offer, as many startups postpone flotations amid the market jitters caused by the eurozone crisis.
He said most beneficiaries of the new fund would be London-based internet firms, but some would be “European-focused” US companies.
“So much depends on things beyond our control – the macro situation – that can shape the environment negatively, but there is an underlying current as we’ve seen with Groupon,” said Dallé.
Index invests in more than a dozen startups in London, including Moshi Monstors creator Mind Candy and music-tracking website Songkick. Dallé said a couple of European companies in Index’s portfolio would go public in the next 12 months, but the eurozone situation means it is virtually impossible to forecast how the market will look too far down the line.
“A number of our companies are getting to the stage where they are ready to go public,” he said. “It’s just a matter of making sure the market is more stable than it is now. In a much more predictable market some [of our] companies would have gone public now, but often there is an urgency [from investors] and companies don’t want to rush so they can wait for the water to be a bit less rough.”
The €500 ($689.4/£429.03) million growth fund is Index’s first new investment initiative since it raised €420 ($579.1/£360.38) million in 2007. Dallé said the majority of investors in the 2007 round reinvested in the new one, meaning that it was relatively insulated from a squeeze on private equity elsewhere in the market.
“You can sense the tension but most of the investors are long term so that has protected us from some of the wider chaos,” he added.
This article originally appeared in MediaGuardian.