November 9, 2011 5:24 am

Index Ventures raises €500m tech fund

Index Ventures, one of Europe’s leading technology investors, has raised a €500m fund, the biggest new pot of cash for internet innovators in the region for five years.

Index, which has offices in London, Geneva and San Francisco, made its first investment from the new fund last month with Dropbox, the online storage provider which was valued at $4bn.

This is its second late-stage fund, and will be targeted at technology companies that are growing fast but with substantial revenues, typically investing between €10m and €50m.

Previously known for backing Skype, the internet telephony service, and Playfish, the online gaming firm sold to Electronic Arts for $400m, Index has made 15 exits from its portfolio in the past 12 months.

These include Lovefilm, the DVD and digital movie rental service bought by Amazon.com for £200m in January, and the London flotation of Betfair, the online betting exchange.

Companies in Index’s original €400m growth fund, raised in 2007, grew sales at an average of 70 per cent last year, with many generating revenues over €100m per annum. However Index declined to give any indicator of the fund’s overall financial performance.

“The focus is on companies who are already proved as a business, who have a lot of headroom in the business model to grow over the next three to five years, and particularly on companies that grow internationally in the European market and into the US,” said Giuseppe Zocco, partner and co-founder of Index.

“Typically these companies are already proved emerging leaders ... we help them to grow internationally and sustain their rapid growth rates.”

Index will continue to invest in seed, early-stage and more mature companies in the internet and software sectors, with a particular focus on investment themes including marketplaces, eCommerce, mobile and payments.

The new fund will provide a much-needed boost to European technology entrepreneurs, after a 12 per cent drop in venture investments in the third quarter of 2011, according to Dow Jones VentureSource.

It will be the largest European-focused growth fund in five years, according to Preqin, an industry research group. Balderton Capital raised $500m in 2009 and Accel Partners’ London outpost raised $525m in 2008. Last year Atomico Ventures, the fund led by Skype’s founders Niklas Zennström and Janus Friis, raised $165m.

Index said it was drawing on contributions from both new and existing “limited partners”, which include funds of funds, endowments, foundations and other institutional investors.

Earlier this week, France Telecom and Publicis Groupe announced a €150m fund, largely for French and European digital entrepreneurs, with the ambition that external investors would match their investment.

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