Venture Capital – Crescendo Ventures moves to London

Crescendo Ventures, the US information technology, communications and healthcare specialist, has established a base in London to strengthen its position as a pan-European investor. General partner Roeland Boonstoppel, who joined from Kennet Capital, heads the new office. Boonstoppel, who previously worked with Atlas Venture, says he was attracted to Crescendo in part by the firm’s genuinely transatlantic’ approach, observing that there are still only a very limited number of firms, Atlas Venture among them, that follow a truly transatlantic strategy.

In line with this philosophy, Crescendo does not raise separate regional pools, instead allocating investments on an industrial rather than a geographic basis from a central fund. The group, formerly IAI Ventures, is currently marketing its fourth fund, Crescendo IV LP, which is targeting between $400 million and $500 million (euros 396 million to euros 495 million) and will, if it reaches the upper end of this range, double Crescendo’s funds under management. Its third fund, which closed last spring on $250 million, is already more than 50 per cent invested.

With the establishment of a London office, Crescendo is set to increase its direct exposure to the European market. Much of the group’s existing exposure in the region has been gained through fund commitments to groups such as Innovacom in France, Wellington in Germany, NeSBIC Converging Technologies Europe in the Netherlands and, most recently, UK-based Add Ventures (EVCJ December/January 2000, page 11). The direct component of Crescendo’s European portfolio, which contains companies such as Netcentrix and Algety Telecom, has resulted largely from co-investment alongside the group’s investee funds.

Discussing Crescendo’s future strategy in Europe, Boonstoppel reveals that the group intends to focus closely on three segments – communications infrastructure, communications services and business-to-business e-commerce. In a climate where deal flow is increasing exponentially and the pace of technological change is accelerating at an unprecedented rate, such narrower specialisation is virtually mandatory, Boonstoppel maintains. “This is a good thing, because we’re getting in the deals we really want to do.”

Potential investee companies, he says, are attracted to a backer with intimate knowledge of their sector, as well as by the potential synergies with other firms in Crescendo’s global portfolio.

In view of the importance of maintaining relationships with other specialist venture managers, the firm may continue to make a limited number of investments in European funds as it steps up its direct activity in the region.

To handle Crescendo’s rapidly growing pan-European deal flow, Boonstoppel is looking to build a five-strong team by the middle of this year, which will include individuals with relevant operational backgrounds. The group’s single central fund investment model, however, means that all Crescendo’s offices are automatically involved with every new investment, whatever its location.