Index Ventures, a Geneva, Switzerland-based VC firm, added a dozen limited partners in closing its fourth fund at $456 million last week, a “record time for a Euro VC fund,” says General Partner David Rimer.
The firm did well on its last two funds, recording returns of more than 30% for each vehicle, according to data from the California Public Employees’ Retirement System as of June 30, 2006. The firm’s biggest success came two years ago when its investment in Skype Technologies paid off. Index invested in the IP-telephony company’s $18.8 million second round in March 2005, then eBay Inc. bought the Luxembourg-based company for $2.5 billion in cash seven months later.
Last year, the firm also recorded five exits, which included three public offerings and two acquisitions, according to Thomson Financial (publisher of VCJ):
• Drug discovery company SGX Pharmaceuticals (Nasdaq: SGXP) went public after it raised more than $100 million in VC financing from Index, Prospect Venture Partners, Scale Venture Partners and other investors. SGX raised $24 million in its IPO in February 2006.
• PDA software maker Trolltech (OSL: TROLL) went public in July on the Oslo Stock Exchange, collecting $20 million. The Olso-based company had raised more than $20 million from Index and other European VCs.
• Urology drug company BioXell (SWF: BXLN) raised about $47 million in its IPO in September on the Swiss Exchange The Milan-based company had raised morethan $80 million in VC funding from Index, AlpInvest Partners, MPM Capital, TVM Capital and other investors.
• Beam Express, a fiber-optic developer that had raised $21 million from VCs, was sold for an undisclosed sum in May. The Swiss startup was a spinoff from the Swiss Institute of Technology.
Europe is now coming into its own and there are few players other than us that are as serious about the European investment arena.
Danny Rimer, Co-founder, Index Ventures
• And CareX, a drug discovery company that had raised $40 million in VC funding, was sold for an undisclosed sum.
Index also sold a 22% stake in online betting company Betfair worth nearly $643 million to Softbank in February.
Index wasn’t the only firm to enjoy success in Europe last year. In 2006, 91 VC-backed European companies went public, up from 69 in 2005 and the most since 2000, according to Dow Jones VentureOne. And Index’s spate of recent exits have won it favorable comparison to U.S. firms. Some have called the firm the “Kleiner Perkins Caufield & Byers of Europe” for its returns.
Fund II, which raised $303 million in 2001, recorded a 35% IRR, according to CalPERS, which is an investor in Index through Grove Street Advisors. Fund III, which raised $397 million in 2004, recorded a 32% IRR. Co-founder and General Partner Danny Rimer (who is David’s brother) says the firm finished committing all of Fund III. “Index was founded 11 years ago with the idea that Europe equated to Silicon Valley of the mid-70s,” Rimer says. “Europe is now coming into its own and there are few players other than us that are as serious about the European investment arena.”
Though the firm primarily invests in Europe, the firm frequently syndicates with U.S. investors to back U.S. companies, such as open source business intelligence startup Pentaho, based in Orlando, Fla.
Danny Rimer says that the firm increased its fund size because it took on two additional life science investing partners. The firm promoted pharmaceutical executive Michèle Ollier to partner and brought on PanGenetics founder Mark De Boer as a venture partner. It also added Saul Klein as an information technology-focused venture partner. Klein recently served as global vice president of marketing and e-commerce for Skype Technologies. —Alexander Haislip