The next Google will come from outside the US
A great quote from Danny Rimer, the EU venture capital partner behind the Skype company. But, if not from the US, will the next Google come from Europe ?
Danny is getting a huge amount of mainstream press coverage. And well he should, the skype investment has netted his family VC firm in excess of £300m. The limited partners of the last fund recouped 100% return with the skype deal alone.
Judging by the amount of PR, Index Ventures must be fundraising again. I would wager that the majority of their fundraising will come from US investors, who are keen on the strong European technology base. The "capital preservation" culture among fund managers in Geneva, Index Ventures home town, wll not encourage great uptake from banks in their neighbourhood.
Some of Danny's observations on Europe are:
To be an entrepreneur in Europe, there is a stigma attached to it," he explains. "There's a reason why England is known as a nation of shopkeepers. Part of it is the idea that it's better to have a shop and keep it up and running than close the doors and try to do something much more significant.
Steady personal income is pretty much a must in Europe. The idea of embracing greater volatility and uncertainty is an alien one. A disastrous attitude if you are to encourage serial entrepreneurs. To quote Stelios Haji-Ioannou, founder of EasyJet, there is no such thing as easy money; all great returns are paid for with risk and volatility.
Danny goes on to say,
"The environment in Europe these days is a brutal one, as huge private equity houses pull in billions while smaller venture groups struggle. Index is one of the few to have had little trouble attracting big investors."
Unfortunately, Index Venture's success is almost an anecdotal statistic in Europe. Even after the 2002 bust among VC firms, established VC funds have been unable to raise finance. Many talented venture fund managers have been struggling to raise a minimum size fund. Julie Meyer has been trying to close a fund since she exited from "First Tuesday" 6 years ago. Similarly Jon Snyder and Marting Bloom at Cambridge Accelerator Partners, and Marc Goldberg at Occam Partners.
Danny concludes with
Innovation is not a problem in Europe. But the lack of a unified market to sell that innovation, or even give it away, is a problem - and so is the paucity of investors willing to back it. "The next Google is more likely going to come from outside the US," says Rimer. "Whether it's in Europe, I am not sure. A lot of things have to change
European entrepreneurs will have to work extra hard if the next Google is up to them.
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