The tectonic plates of venture capital in Europe are shifting once again as three major firms have recently brought in new blood.
Leading pan-European venture capital firm Wellington Partners is bolstering it’s presence in London with the appointment of the former Yahoo! manager and 3i sector partner Daniel Waterhouse a full-time Venture Partner. Almost simultaneously, DFJ Esprit, also a top-tier VC has brought in serial entrepreneur William Reeve as venture partner. And in the last couple of months Advent has hired Michael Chalfen as a general partner, a former big gun from Apax.
Wellington says Waterhouse will continue to focus on the digital media and online sector. “Continue” is right. Waterhouse picked up a good reputation as a sector partner during his three years at 3i, but was left somewhat high and dry after they shut down their venture arm. At least he brings his operational experience at Yahoo! where he was involved in the acquisitions of Kelkoo and Zed between 1999 and 2005. He has worked in deals including Demand Media, the world’s largest photo blogging site Fotolog and travel site Fastbooking.
In Q4 last year Wellington raised its 4th early stage fund of 250m Euros which is exclusively geared to tech companies in Europe. General Partner Frank Böhnke says the fund is “stage agnostic” to a certain degree, so will participate in A and B rounds but also expansion capital and seed. At the base, they would start at couple of hundred thousand euro investment, ranking up to 750,000 Euros for a big seed round. Or up to 20m Euros at the latter stage of the game. Some Wellington investments include Adconian, Proximic (out of Germany), Game Duell (Berlin) and Truphone in the UK.
Quiet clearly Wellington realised that it couldn’t drive a drive a Pan-european strategy staying in Munich, and to his credit Böhnke admits this. London is now European tech’s trading post, as scores of entrepreneurs and investors – US and European – now pass through London every week, and all the major VCs have a presence there. While Munich has been a German VC heartland for a long time, the gravitational pull is now internally towards Berlin – in the case of Germany – and towards London in a pan-European sense.
Wellington will also be calling on the talents of Loic Le Meur, founder of Seesmic and prominent player in Silicon Valley, as a venture partner. Hiring Le Meur as a representative is a bold, statement and highly PR-able.
Talking to some sources in the VC market, one commented: “Wellington always said they were big but fund previous to this one was low. This latest fundrasing has closed at quite a high number, so they must have said ‘Fuck, this lets go after the big boys’.”
Another venture source said: “I think it is a good move for Dan, but not that surprising. 3i are out of venture, he is a venture guy, Wellington are a good fund.”
But Wellington has Balderton, Index and Accel to beat in this race which is no easy feat.
Although Wellington created a London office almost a year ago they were not many seeing London deals and no-one went to Munich, so they needed to expand in London. Every other week they have a partners meeting in London which is a big commitment to the space, along with hiring Waterhouse to start making dealfow happen. Although a great hire, he probably won’t have impacted the firm too heavily, coming from a dead 3i operation, and Wellington’s partners are unlikely to have needed to give up a chunk of their “carry”, the percentage of profits you are entitled to as a partner. Typically long-time VCs or ex-fund managers get a big carry, but new VCs who have have been operational (actually worked as an entrepreneur, say), do not.
Meanwhile DFJ Esprit’s new hire has been charged with seeking out new investment opportunities across Europe. Reeve joins from DFJ Esprit portfolio company LOVEFiLM International, where he was Chief Operating Officer. He has 11 years as an internet entrepreneur under his belt, founding ScreenSelect.co.uk in 2003, prior to which he was European Group Director for Forrester Research. Reeve is a serial investor in the UK high-growth scene, and is involved with Graze.com, iAnnounce.co.uk, True Knowledge Ltd and Zoopla.com. To date DFJ Esprit has invested in – among others – Buy.at, Alphamosaic, KVS and Blackspider, and is the European partner for the global DFJ Network of venture funds. However, he’ll be going some if he can keep up with DFJ colleague Nic Brisbourne, a familiar face on the UK and European Internet scene.
Wellington has as good a chance as any at ramping up their operation in Europe, and they are clearly being aggressive. Index remains a force to be reckoned with, while Accel might be Wellington’s target for displacement – although it has a new-ish gun in the shape of the diamond-smart Sonali De Rycker as partner. Balderton remain hard to touch – especially since the Bebo exit.
Perhaps Wellington will fight it out with Atlas and Advent? But there are stirrings on that front too.
Advent Venture Partners hasn’t been caught napping. It recently hired Michael Chalfen as a general partner. Chalfen was one of the two main guys doing early stage at Apax when it was doing cool stuff. Then when Apax left early stage a couple of years ago Chalfen went off the radar and has only recently resurfaced. He’s not well known in the Internet scene (try finding a picture of him) – so, not a “statement” hire as such – but is clearly pretty darn experienced.
But overall these moves are good news for the European tech scene.