VCs’ hedge funds challenge

Hedge funds and large institutional investors are competing with VCs for large deals according to data from Go4Venture, a London-based corporate finance advisory firm for European technology entrepreneurs and their investors.

As part of its monthly newsletter, it found that January contained two instances of tech companies receiving backing from non-traditional sources. Blyk, an advertising-funded mobile network for 16 to 24 year olds, raised an undisclosed amount from Goldman Sachs, Industrial and Financial Investments Company (IFIC) in a series B round. Yonja, a Turking social networking website, raised €8.5m from hedge funds Greywolf Capital Partners and Tiger Global Management.

Go4Venture also recorded 42 European technology venture investments in January 2008 according to its Headline Transaction Index (HTI), an increase of 15, or 56%, from 27 in

the same month last year. Total monthly amount invested fell 10% year over year from

€287mn to €258mn, although January 2007’s figures are skewed by the unusually large investment of €77m into Plastic Logic. If this is taken out, the total amount invested in January 2008 would have been 22% more on a year over year basis.

The report also saw three deals over €7.5m take place in emerging markets. Including Yonja, there was also a €27.2m investment in Enforta, a Russian broadband provider, and Badoo, a Russian social networking site focusing on photo and video.