Index Ventures, a pan-European venture capital firm, has closed its third fund Index Ventures II at $300m, bringing its total funds under advisory to over $500m.
Its strategic corporate investors, who also work on business development activities of Index and its portfolio companies, include global technology firm Cisco Systems. Other institutional investors, most of whom are returning investors, include UBS, LGT Capital Partners, Standard Life Investments, Frank Russell Company, Invesco, as well as endowment and pension funds.
Index Ventures, which began investing in European technology in 1992, focuses on technology and biotechnology companies in Western Europe. To date it has made 34 investments, thirteen of which have either gone public or been acquired. These include UK company Virata, Numerical Technologies and Genmab.
The Geneva-based firm, which is dedicated to venture capital rather than leveraged buyouts, claims that fund-raising for Index Ventures II was relatively easy. “We targeted $300m and hit it in six months. It was not anywhere near as difficult as the first fund set up in 1998, but was obviously more difficult than it would have been at the beginning of 2000,” conceded David Rimer, the operating partner.
Rimer is upbeat about the quality of deal flow, which he argues is far superior than, say, a year ago. “In technology there has been a flight to quality.” For one, he believes that managers are more experienced. “Those that launch into a start up today are far more motivated by their vision than just getting a quick profit.” Additionally, he says the pricing is better today.
The fund invests in companies for a period of two to four years. A typical investment size is from $3-5m, with $10-20m being invested over the life of a company. Thereafter the three routes the company can take, says Rimer candidly is either: “go public, get sold or go bankrupt”. Fortunately, none of the companies in Index Ventures has taken the latter route.