US technology venture capital firm Benchmark Capital is to cut the total size of its European fund from $750m to $500m, the company has announced.
Eric Archambeau, a partner at Benchmark believes that the firm will still be able to make the same number of investments as had been originally planned: “Salaries have been going down, rents have been going down, marketing budgets have been going down. We think it's a pretty good time to be investing in early-stage technology companies if you get 40 percent of the company for much less than you used to pay for 10 percent,' commented Archambeau, in an interview with Red Herring magazine.
The move continues the trend widely seen across Europe of reduced investment value by VC firms. Research from Initiative Europe shows that Q1 2002 investment by European venture capital firms stood at E2.1bn into 146 companies, down from E2.7bn in Q4 2001. To date, Benchmark has invested around $150m of the $750m it received in commitments from its investors.
Benchmark says that it expects the $500m fund's investment lifespan to be about five years, the same period over which it expects to invest its most recent fund in the United States. Since moving into the European market, Benchmark has made 14 investments from its London headquarters.