Fund Raising of the Year – Venture

In the toughest fund raising environment since the start of the decade, this year’s winner of EVCJ’s fund raising of the year for venture capital succeeded in not only raising a fund but equalling their last effort, which is more than some of their peers managed.

Index Ventures wins the award for closing Index Ventures V on target at €350m. It will focus on early stage and seed investments in technology, biotechnology and clean technology sectors throughout Europe, the US and Israel. Fund V was raised predominantly from Index’s existing investors.

Index partner Bernard Dallé said: “We’ve had an enthusiastic response from our LPs but if you compare it to last year with our growth fund, it was definitely a more difficult environment. The fundraising took a lot more meetings than previous funds but overall it was a success.”

Investors to the fund were split approximately 50:50 between the US and Europe, a mixture of pension funds, funds of funds and family offices. Tellingly, every LP from the previous fund returned for a piece of the latest Index offering. Five investments have been made so far, although only one has been announced, that of Just-Eat, an online takeaway ordering service.

With a typical investment size of between €5m and €15m, approximately 60% has been allocated to information technology companies, Index’s bread and butter – the firm currently has 45 early stage tech businesses in its portfolio. The remainder is to be allocated to biotechnology – of which there are 17 on Index’s books – and a small portion set for cleantech.

Partner Francesco De Rubertis said: “On the biotech side, Index is focused on finding the best companies with the strongest pipelines. We are equally interested in very early stage ventures and more mature companies with established proof-of-concept. In terms of therapeutic areas, our priorities are oncology, CNS, immunology and inflammation. We continue to see tremendous innovation and development within these areas, driven in part by the ever growing pharmaceutical pipeline deficit.”

Founded in 1996, it’s the fifth early stage fund Index has raised in the last 10 years and was raised just over two years after Index Ventures IV, which closed on the same amount – €350m – in 2007.

Index’s track record in backing some of the most successful internet companies in Europe is key to its success on the fund raising trail. It sold internet call business Skype in a US$2.6bn deal to eBay in 2005 in the largest ever exit seen by the European venture capital industry. In 2007 it was one of the backers of Swiss biotech company Addex Pharmaceuticals when it went public, raising €83m on listing, making it the largest biotech IPO in Europe for around five years. In 2008 Index followed this up with the sale of MySQL, the second largest independent open source software company in the world, to US software giant Sun Microsystems for US$1bn. Add to this names like Last.fm (sold to CBS for US$280m) and the recent sale of mobile gaming business Playfish to Electronic Arts in a deal worth potentially US$400m, and you get a formidable array of eye-catching exits.

Dallé said: “Over the past 12 years, we have been fortunate enough to work with some of the most successful entrepreneurs in the world who have started game-changing companies such as Betfair, Skype, MySQL and GenMab. There are certainly challenges facing many industries right now but, thanks to the ongoing commitment of our limited partners, we can continue to focus on our core strength, that of finding and supporting ambitious, dedicated entrepreneurs.”

Investment activity

Despite the downturn, Index has been investing over the past year, including UK medical device company NovoCure, Dutch biotech business ProFibrix, and UK online takeaway meal service Just-Eat. Apart from Playfish, it has overseen the sale of a drug developed by portfolio company PanGenetics to Abbott Laboratories in a deal worth up to US$190m.

Index is headquartered in Switzerland where it’s two co-founders, Neil Rimer and Giuseppe Zocco, are based, along with eight others. Ten are based in the London office, including SeedCamp founder Saul Klein, former CEO of Yahoo Europe Dominique Vidal, as well as former senior vice-president of Cisco and former CEO of Joost, Mike Volpi. There is also one partner and two advisors based in Jersey in the British Channel Islands.

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SNAPSHOT:

Headquarters: Geneva, Switzerland

Founded: 1996

Other offices: London, UK; St. Helier, Jersey

Partners: 6

Name of fund raised: Index Ventures V

Amount raised: €350m

Investment focus: All sectors although primary focus is technology and life sciences, with an interest in green technology. Invests between €5m and €50m in seed, early-stage and late-stage companies.

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WHY THE FIRM WON:

• Raised €350m for a venture fund in a very difficult environment

• Every LP from previous funds returned for fund V

• Has already made five investments from the fund

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Shortlist:

Index Ventures V (Index Ventures)

Encore I (Encore Ventures)

Balderton Capital IV (Balderton Capital)

Atlas Venture VIII (Atlas Venture)

Accel London III (Accel Partners)