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A European venture capital firm makes a bid for a place on the A-list
The news of eBay’s purchase of Skype for $2.6 billion dominated the tech blogosphere last week – with good reason. The deal conjured up memories of wilder Internet days, when major acquisitions were commonplace, despite vague business models and scant revenues. It also reminded us how quickly an idea can command real value from investors (Skype is just two years old) and how lucrative the venture capital business can be.
On this latter point, regular readers of alarm:clock may recall that we have closely followed the moves of one of Skype’s first investors, Index Ventures. And we’re not surprised that the firm has finally hit one out of the park.
In March, when Index Ventures raised its latest fund of 300 million euros, we pointed out that the Index team has been "on message" since 1996, applying Silicon Valley-style investment principles to European tech investing. Much of Index’s Silicon Valley DNA was carried across the Atlantic by Neil and Danny Rimer, two of the four Rimer brothers who run Index Ventures, which is based in Geneva, Switzerland.
Neil, the eldest of the Rimers, spent four years at Montgomery Securities, one of the original Silicon Valley boutique investment banks. Kid-brother Danny followed his lead, joining San Francisco-based Hambrecht & Quist, another household name in technology investment banking.
Danny, who served as a board member at Skype, helped fuel the first cycle of Internet exuberance in his role as an analyst, taking high-flyers – Amazon, CNET, and Netscape – through successful IPOs. He launched his VC career with The Barksdale Group, a firm headed by Netscape’s former CEO, Jim Barksdale. Danny Rimer now runs Index Ventures’ London office.
With its deep ties in Silicon Valley, Index has been able to gain access to the right people and opportunities on behalf of its portfolio companies. For example, one of its investor co-travelers, Benchmark Capital, made its fortunes with an early investment in eBay and Benchmark partner Robert Kagle still sits on eBay’s board. With such well-established connections between Index and eBay, we suspect the introduction between Skype and eBay was easily made.
Meanwhile, Index has invested alongside Benchmark Capital in a number of deals, including current investments in Betfair, a rapidly growing and profitable online betting company, and MySQL, the developer of the largest open-source database program. While we don’t expect MySQL and Betfair to reap Skype-like rewards, positive outcomes on these investments seem likely.
These successes may not do much to alter Silicon Valley’s status as the center of gravity for venture capital activity; but we believe that, with a few more big paydays, Index Ventures can submit its application for inclusion on the venture capital A-list.