UK startup icons launch fund to bridge Europe's 'Equity gap'

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Two icons of the UK’s tech startup world are joining forces to create a new fund to address the so-called ‘equity gap’ in Europe. European Founders Capital (EFC) is being led by Michael Birch, co-founder of Bebo, and Brent Hoberman, who set up the dotcom bubble era Lastminute.com but is better known more recently for being a serial angel investor and co-founder of MyDeco.

They are joined by Rogan Angelini-Hurll, an old friend friend of Hoberman’s and former City research analyst at Salomons. Peter Dubens, who built the Pipex ISP business, is also backing the venture. Dubens sold Pipex’s broadband business to Tiscali for £210m in 2007.

EFC will have an initial £20m of seed funding but is aiming for £50m in total. The idea is to increase the availability of early-stage funding in Europe, which historically lags behind the US, and has led to a gap between early stage and Series A funding. Europe’s seed funding eco-system has never matched Silicon Valley’s in part because the business angel environment for technology is undeveloped and because European VCs have historically not reached much lower than Series A rounds, unless in syndication with other parties.

Hoberman told The Sunday Times newspaper: “We aren’t taking institutional money,” he said. “All the money comes from founders – people who have done it before… We are going to see some great, disruptive companies coming out of this downturn.”

The British Venture Capital Association recently found that member firms raised only £230m last year, a £1 billion drop compared with 2006.

The emergence of EFC is perhaps part of a wider trend in Europe. Last year Spreadshirt founder Lukasz Gadowski set up Team Europe in concert with a number of other German entrepreneurs, aiming to fund early stage startups. He was joined by Kolja Hebenstreit (early employee at Spreadshirt, and seed investor in StudiVZ).

Team Europe was itself pre-dated by the ‘Partridge Family’ of European Startups – the European Founders Fund consists of three brothers, Alexander, Marc and Oliver. The three founded Alando.de which became the market leader of internet auctions in Germany, selling out to eBay, after which they founded Jamba!, which became the market leader for wireless content for mobile phones in Europe. In 2004 Verisign acquired Jamba $273 million and in 2006 News Corp. acquired 51% $187.5 million.

It would appear then that Europe’s former founders are getting their acts together at last.

UPDATE: I just had an email from Brent Hoberman to say that there is more detail to follow with this announcement. And as has been pointed out, EFC doesn’t have a site ready yet – but stay tuned to TechCrunch Europe for more.

  • http://wakoopa.com/robert Robert Gaal

    The 3rd paragraph of this article needs to be repeated more often. We do lack smart angel or early seed money, so good luck to this fund. Hopefully they’re not the only ones who have this mindset.

  • http://www.facebook.com/people/Ivan_Pope/501449152 Ivan Pope

    Mike – Dubens or Dubbens but not both!

  • http://linkcrafter.com/blog Linkcrafter

    That’s a GReat initiative.
    Lastminute is a great success. I buy most of my travel tickets with them. Great checkout system :)
    I don’t know about bebo, but MyDeco is a great product. I love it. I love it.

    Thanks Michael and Brent.

  • http://GoogleFraud Google Fraud
    • Nigel

      Sounds great.
      How does one contact EFC?

    • Dave

      Thats no fraud – thats tax planning. Whole businesses rely on this profession – including UK businesses, like tax advisors tax auditing companies, tax lawyers and so on – this advise-income is of course taxed in the uk. if you want to directly tax the actual “primary” income (googles) in the uk you have to lower your taxes and thus invite google (and other companies) to tax there incomes directly.

      it is shortsighted to call “fraud” on companies doing tax planning and tax structuring. we need LOWER taxes for businesses – they will lead to HIGHER tax income.

      calling fraud and raising penalties is the wrong way – it’s always just the tip of the iceberg and forces entrepreneurs to incorporate in nicer jurisdictions right away.

    • http://www.spiderline.net Spider Line

      Huh? Weird comments :/

  • Marc

    URL?

  • http://techcrunch.com/ Robin Wauters

    Apart from the name, why the conclusion that the fund will focus on ‘Europe’, and exactly what constitutes these people’s view of Europe?

  • http://popurls.com/pop popurls.com // popular today

    popurls.com // popular today…

    story has entered the popular today section on popurls.com…

  • http://blog.kwiqq.com Raj Anand

    Fantastic news ! Great to see this coming from within the European entrepreneurs ecosystem.

  • Martin

    Suggestion:
    Not directly related to this article, but to the URL uk.techcrunch.com

    Shouldn’t uk.techcrunch.com be renamed to euro.techcrunch.com ?

    This would much clearer show the “mission” of this site – as european “hub” and probably look much better (oh – i am from europe – i am invited to read euro.techcrunch.com) for “non uk” readers – thats why i love to read thenextweb.com but only occasionally check uk.techcrunch.com – i just don’t feel invited :-)

    • http://uk.techcrunch.com Mike Butcher

      Martin – it’s in the plan. We only just relaunched from TechCrunch UK. URL will change later

  • http://livz.org Steven Livingstone

    Fantastic. I’ve had little success in even discussing possible funding for Valebrity and where i want it to go. I put much of that down to not talking with (or even finding) the right people as the numbers state the need.

    Even an opportunity to discuss ideas and get feedback from people such like this would be huge. Most of my private advice comes from US entrepreneurs just now.

    let’s disrupt Europe and the world :-)

  • http://fletchnz.com fletch

    A fund fund run by been-there-and-done-that people? Brilliant….and not before time

  • http://www.seedcamp.com Reshma

    Great to see more capital available in the pre-VC stage. We’re certainly seeing better and better startups at every Seedcamp Mini/Main Week. Lot of potential here in Europe!

  • http://mylocator.com VentureLocator.com

    hopefully they will be allowed to invest in startups outside the UK.

    MyLocator.mobi – its here

  • http://uk.techcrunch.com Mike Butcher

    UPDATE: I just had an email from Brent Hoberman to say that there is more detail to follow with this announcement. And as has been pointed out, EFC doesn’t have a site ready yet – but stay tuned to TechCrunch Europe for more.

  • http://www.gymfu.com Jof Arnold

    The most significant thing about this is that this will enable the funding of companies who need a modest runway but will never need VC. If they’re funding in the £250-500k mark then this is great news indeed and perfect timing given the economy.

  • http://www.facebook.com/people/Sean_Godzillaa_Miller/545257316 Sean Godzillaa Miller

    so where do we go to get in contact?

  • http://www.deskspacegenie.co.uk Philip Wilkinson

    Great idea and I bet we start to see more of these funds pop up over the next few months from previously successful founders.

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    […] little more detail on TechCrunch which adds a European dimension to the […]

  • http://www.proofhq.com Mat Atkinson

    This is a great move.

    One of the most powerful features of the Silicon Valley ecosystem is the way that successful entrepreneurs recycle their gains/experience/contacts back into new generations of start-ups.

    Brilliant if that pattern can be repeated in Europe.

  • http://www.ojointernet.com/noticias/european-founders-capital-nuevo-fondo-semilla/ European Founders Capital, nuevo fondo semilla

    […] iconos del sector de la tecnología en el Reino unido han unido sus fuerzas para lanzar un nuevo fondo de capital de riesgo para intentar solucionar la deficiencia de capital en […]

  • Glenn Hall

    Technology ventures, hopefully to include those beyond pure web propositions? What these founders understand is communicating with people, using technolgy to do this, and building business that way. Technology is a servant, not the end story.
    What we all need now is more innovation in devices and services that feed data into the web, that people can use for their own lives. Sensors for example, I’d hope their will be growth there, and certainly with elegant methods for connection.

    Good news for sure. Hoberman understands business, LM was a great play and still is.

  • http://www.wisequeens.squarespace.com Donna Jackson

    Good development for all Tech Start ups. I will watch and report on how this unfolds with interest.

  • http://community.brandrepublic.com/blogs/bloggingforfood/archive/2009/04/21/digital-britain-conference-the-most-important-to-be-held-this-year-says-gordon-brown.aspx Digital Britain Conference the most important to be held this year says Gordon Brown. - Blogging for food - Blogs - Brand Republic

    […] from this government. Hats off to the founders of Bebo and Lastminute who’ve just set up an angel fund to support innovative businesses, identifying a real gap in the market for the micro-business […]

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    […] icons create seed-stage fund in Europe –  European Founders Capital, a fund created by Michael Birch, co-founder of Bebo, and Brent Hoberman, co-founder of MyDeco, has raised $29.5m […]

  • http://www.techgearx.com/roundup-fox-news-launches-ureport-att-doubles-3g-capacity-and-more/ Roundup: Fox News launches uReport, AT&T doubles 3G capacity, and more | TechgearX.com

    […] icons create seed-stage fund in Europe –  European Founders Capital, a fund created by Michael Birch, co-founder of Bebo, and Brent Hoberman, co-founder of MyDeco, has raised $29.5m […]

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