Accel London closes $475m fund in just eight weeks(2)

The London arm of US-based VC group Accel Partners has bucked the dismal fundraising trend for European venture by racing to its target, thanks to strong support from US investors.

Accel Partners has held a first and final close on Accel London IV, a $475 million vehicle that will invest predominantly in Europe and Israel, after just two months in market. The firm said the fund was “significantly over-subscribed” and had experienced “unprecedented demand”.

Accel's success is notable given the difficult fundraising climate in Europe for venture capital firms at the moment, a consequence of its relatively poor track record over the last decade. Total capital raised by European venture funds has been in steady decline for the last five years, according to data from Private Equity International's Research & Analytics division: almost $10 billion was raised in 2008, but the total fell to less than $1 billion in 2012. Indeed, in eight weeks, Accel has raised more than half as much as the entire asset class managed in Europe in the whole of last year.

In eight weeks, Accel has raised more than half as much as the entire asset class managed in Europe in the whole of last year.

Accel said its investors were a mix of fund of funds, charitable foundations, university endowments, pension funds and family offices. 65 percent of the capital came from US investors, 30 percent from European investors and 5 percent from elsewhere, according to a source close to the firm.

The fund will invest in Accel's “core areas of expertise, including consumer Internet, big data, cloud, SaaS and mobile”. The London office's recent big investment successes include business analytics company QlikTech, gaming company Playfish and price comparison site Kayak, which the firm said were now worth a combined $4 billion. It has also invested in some of the most talked-about tech businesses in Europe, including Mind Candy (home of Moshi Monsters), music streaming site Spotify, taxi app Hailo and short-term lender Wonga.

Accel's London arm operates largely independently from its US parent, with a separate fundraising mandate and a separate investment committee. However there are close links between the two, which the firm looks to exploit. 

London-based partner Sonali De Rycker told PEI: “The best entrepreneurs need access to the insights, experience and network that come from being a very established Silicon Valley firm. The ability to provide access to the best entrepreneurs in the Valley, who have created market-defining category-leading businesses, is absolutely unique. And right now, in this region, we are the only firm that can do that. It’s just a very unfair competitive advantage.”

NB. PEI recently sat down with De Rycker to talk about Accel London and the future of venture in Europe. You can read our exclusive in-depth interview in the April issue of the magazine.