Accel Partners – one of the largest venture capital firms active in Europe – today announced the close of its $475m London IV fund dedicated to Europe and Israel.
It’s not exactly a surprise. With offices in Palo Alto, London, New York and Bangalore, Accel has tallied up an impressive list of investments including familiar names Angry Birds (Rovio), Dropbox, Facebook, Groupon, Kayak, Playfish, Spotify, Wonga and Etsy.
Kevin Comolli, a founding partner at the Accel London office, spoke to us about plans for the new fund, “virtuous cycles” and where venture capital is at in Europe:
You’ve been in venture capital for 26 years – and at Accel Partners for 12 years?
Working on 13… I was a founding partner here at Accel London. That was a significant event, for Accel to set up shop in Europe in 2000… An important acknowledgement that we felt Silicon Valley didn’t have a monopoly on innovation and that there were world-class innovation and entrepreneurs in Europe. So we came over 13 years ago and we’re very pleased that we did.
This fund is the fourth fund out of London, which brings the total funds under management dedicated to Europe and Israel to about $2bn.
Have you seen big changes in the VC ecosystem in Europe?
It’s become so much more sophisticated – repeat entrepreneurs, angel investors, more venture capitalists… With repeat entrepreneurs, you have a virtuous cycle where repeat entrepreneurs refer new opportunities to venture capitalists. It’s been great to see this kind of virtuous cycle, that a lot of people thought could only really exist in the Valley, now really exist in clusters around Europe.
We were the first investor in Playfish, the social gaming company which was acquired by Electronic Arts. Kristian Segerstrale (pictured right), the CEO and founder, introduced me to Ilkka Paananen, the founder and CEO of Supercell, where we were also the first venture investor…
We’ve had people we’ve worked with – entrepreneurs like Lars Bjork the CEO of QlikTech [the first Swedish venture-backed company to list on the NASDAQ] who joined the board of one of our other venture companies, Alfresco, because we’re planning to take them public on the NASDAQ.
The redeployment of these really skilled and experienced people within the ecosystem has really helped that sophistication.
How many investments are you hoping to make this year?
We’ll start deploying the new fund I’d say in the second half of the year. Typically in a year, we’d do between eight to 12 investments. It’s hard to predict exactly how many. This is not a quota-driven business. It’s more important that you make good investments.
Speaking to TechCrunch this morning, you mentioned Eastern Europe and the Nordics are of particular interest?
Our remit is Europe and Israel. I think our first fund was more heavily weighted towards traditional Western Europe – France, Germany, the UK, a little bit the Nordics and Israel. But now we’ve done much more; we’ve made three investments in Russia, we’ve got two in Lithuania now, and we’re currently looking into Central and Eastern Europe. It’s become much more geographically fragmented. We’re on airplanes a lot. I was in Helsinki last week both for a Supercell board meeting and meeting a bunch of companies. Lots of interesting stuff in the Nordics, particularly Sweden and Finland.
The new fund will place less emphasis on consumer internet, more on the other areas where Accel has expertise. Can you tell us a bit more about that?
As you know, our industry always goes in cycles. I think we’re coming out of a cycle, where there was much focus and emphasis on consumer internet for the last six, seven years. Now we’re coming into an area with a refocus on the enterprise and therefore things like big data, cloud, SaaS and the mobilisation of all of these services…
We’ve always maintained a balanced investment approach… I’d say we’ll probably have a little heavier weighting in the enterprise area than we have in the last seven years. But we will maintain a balanced approach.
Any particular areas you find exciting? Payments, maybe – or marketplaces, since you’re an investor in Etsy?
We like marketplaces, payments… We’ve been very active in the gaming sector: Gameforge, MindCandy, Playfish and now Supercell (pictured above), which is just a juggernaut and one of the fastest growing companies in terms of revenue and profit that Accel’s ever seen. So gaming has been a very active category.
Then, again, the subcategories around the enterprise with big data, analytics, storage, security, SaaS and, as I said, mobile, which these days is more of a horizontal category than a vertical one.
Was there any doubt Accel would raise this next fund? It seems it’s a large enough firm to keep the cycle going.
You can never take a fund-raise for granted. The limited partners take a fresh look at each fund-raise and assess the team, the platform, the track record, the market position, the market opportunity. We’re very fortunate that the limited partners came away thinking we had a very compelling proposition, which enabled us to raise this fund in an unprecedented time with great demand. We were very oversubscribed.
I think it’s interesting too that about 65 per cent of the capital came from the US. These are world-class sophisticated investors in the asset class, and they recognise, I think, the opportunities here in Europe…
This is obviously great news for Accel London but I really consider this great news for the industry in Europe. It’s validation that there is capital interested in this region and venture funds that are performing, and underlying companies that have compelling value propositions. That’s great news.
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