With less VC firms in competition, a pool of talented entrepreneurs and a broadly connected consumer base, Europe is a wonderful place to be a VC right now, according to Frédéric Court (picture right). A veteran of corporate banking in London, Milan and New York as well as an entrepreneur in his own right, Court was recently in San Francisco, CA for the Web 2.0 Summit. What major differences do you see between the way VC do business in Europe and in the Silicon Valley? In Europe, there are less than 10 VC firms that have more than $200 million. There are four times as many in the US. Typically, a European VC will be on four to seven boards while an American one might have as many as 10. Because of bigger funds available and of time constraints, there is a temptation for an American VC to write bigger checks. But big and quick IPO are not as common as they were in the late 90s and it is harder to make a profit on your investments. Often American VC have to invest with no visibility. It took courage to fund YouTube in 2005 when it was essentially a video dating site. We prefer to put in a little bit of money on a good idea and then give more when the concept has proven itself.
What has changed in the VC world with Web 2.0 companies?
The advantage of the Web 2.0 is that companies need much less money to launch a product or a service. You can do it with a few hundred thousand dollars. That’s very different from six or seven years ago. But I am worried to see that, because they have so much money to invest, American VC are pouring in a lot of money into those companies. This goes against the benefits of the Web 2.0. The enthusiasm is justified, but we need to remain calm because very few will succeed. Of course, entrepreneurs take the money because they know things are cyclic and they can buy time.
What kind of reactions do you get from American VC?
They fall into two categories. Some of them are not interested in Europe at all. Some of their companies are doing very well in Europe without any effort there. That’s the case with YouTube. However, others are very interested in Europe because they realize there is a lot of innovation there and there is a good broadband infrastructure. For example, triple play is well established in France where you see commercials for triple play players on prime time TV.
This did not go unnoticed in the US. So you see American VC who want to talk to us about how their American companies could maximise their base in Europe and others who are interested in helping European companies in the US. Netvibes, for example, is a European company which got half of its funding in the US.
Tell us about your latest deals?
Advent Ventures invests in high-tech and biotech companies. In high-tech, our interest goes from hardware and semiconductors to online services for end users. Working with two business angels including Brent Hoberman (the founder of Lastminute.com), we just invested one million dollars in The Moving Service, an online move planner and marketplace. It was seed money and we will do another round next year. With Partech, we co-invested in Qype, a local content and social network site.
At the Web 2.0 Summit, I met with Union Square Ventures who have an approach very similar to ours. By pure luck, we were looking at the same London-based company. We are talking about co-investing in it. I also talked to American companies who want help setting foot in Europe.
Any other thoughts to share?
Buyers are interested in acquiring companies earlier on. If an entrepreneur is looking at selling today for 30 million dollars or later at 300 million, he might be tempted to sell earlier, especially if he was burnt once already.
Overall, I think the Silicon Valley is too centered on itself. There is a tendency to think it is all happening here. Yes, they are Google and Yahoo alumni who are going to start their own companies. But people here tend to be too far ahead of mainstream expectations.