Accel London Axes 2 Public LPs

Accel Partners’ second fund targeting Europe and Israel was “significantly oversubscribed” and came together quickly, says Kevin Comolli, the fund’s managing general partner.

At $450 million, Accel London II was slightly smaller than its predecessor, a $509 million vehicle raised in 2001. “We added some LPs, but it was extremely difficult because interest from investors from fund I was so strong,” Comolli says. Accel was able to make a bit of room by excluding two public LPs due to FOIA concerns. Comolli declined to name the excluded LPs or any other LPs in the new fund.

A regulatory filing notes that Accel London II had 62 accredited investors, with about $280 million coming from 38 U.S.-based LPs and about $170 million coming from 24 investors outside the United States.

All four of the general partners in fund I will continue in the new fund. Also, the firm plans to add two or three more principals or general partners over the next 18 months.

Accel won’t start investing from the new fund until the third quarter, when fund I is expected to be fully invested. Fund II will invest in early stage software, networking and Internet companies in Europe (mainly the United Kingdom) and Israel. About 30% to 40% of the firm’s first fund went to Israel-based companies.

Accel expects to invest the new fund over three and a half years, at least one year faster than its first, because the “world is moving a little faster again,” Comolli says. The M&A market, for instance, is picking up. Two of the 33 companies Accel backed in fund I have been acquired in the past nine months: P-Cube Inc. and Kagoor Networks Inc. “What’s encouraging is that neither one was for sale,” Comolli says. “Both received unsolicited approaches from world-class companies.”

P-Cube, which makes networking software, was acquired by Cisco Systems in October 2004 for $200 million. It had previously raised $72 million in three rounds from Accel, ComVentures, Intel Capital, Venrock Associates and other investors, according to The MoneyTree Survey from PricewaterhouseCoopers, Thomson Venture Economics (publisher of PE Week) and the National Venture Capital Association.

Kagoor, which makes VoIP call processing software, was bought by Juniper Networks in May for $67.5 million. It had previously raised $40 million in five rounds from Accel, ComVentures, Intel Capital, VantagePoint Partners and others, according to the MoneyTree.

Comolli declined to reveal Accel’s ROI from the sales of P-Cube and Kagoor.