Venture Capital – An InSight into Europe

As the online revolution gathers pace, the critical factor for e-commerce companies is no longer the underlying enabling technologies but a global business model. Therefore, for European e-business ventures, the ability to move rapidly into the US market is virtually a prerequisite. InSight Capital Partners, an established US venture and private equity group focusing on the business-to-business sectors of the IT industry, believes itself to be ideally placed to help companies do just that.

Roel Pieper, the former executive vice president of Dutch electronics giant Philips, joined InSight as a managing partner last autumn to spearhead the firm’s European operations. He reveals that InSight will shortly hold an initial close on its first dedicated European fund, InSight Capital Partners Europe I, a vehicle slated to amass between $250 million and $400 million (euros 247 million to 396 million).

InSight, which already manages funds totalling more than $500 million, has always invested a substantial proportion of its capital outside the US, venturing into both Europe and Asia, but now, says Pieper, the firm intends to create an organisational model to optimise portfolio leverage between Europe and the US. “The notion that we will have separate teams for different geographic sectors is erroneous, Pieper explains: “To take appropriate decisions and define strategies, both for our funds and our portfolio companies, we must act as a co-ordinated global operation.”

However, unlike Crescendo, another recent US entrant into Europe (story, page 16), InSight has elected to raise discrete funds for European and US investments (a $500 million to $800 million US fund is being marketed in parallel with the European offering). This, says Pieper, is purely because many investors find this arrangement preferable.

In the US, InSight’s portfolio is heavily biased towards business-to-business e-commerce solutions. Pieper predicts that the European fund, while broadly mapping InSight’s US portfolio, will contain a higher proportion of business-to-consumer enterprises, given that this sector in Europe is currently less strongly developed than in the US. Taking the global perspective, however, InSight expects its various geographic markets to synchronise very rapidly. “Within the e-business space, we operate from the absolute conviction that smart ideas are everywhere,” Pieper declares.

InSight’s historic investor constituency is largely US-based. The firm has strong relationships with leading financial institutions such as Goldman Sachs, JP Morgan and UBS as well as corporate investors including Microsoft and MSD, Michael Dell’s venture vehicle.

The new European vehicle, however, is likely to draw a majority of its capital from European sources, Pieper reports, adding that bringing European corporate investors on board has been a high priority.

The group has formed close links with ABN AMRO, which will play an important role in the European fund. It will also co-operate closely with Gilde of the Netherlands, where Pieper is a member of the Gilde IT Fund’s advisory board.