Add a new VC to the ranks in Europe: Station 12 is raising £150 million ($250 million), which it plans to invest in Series A and B rounds in the future Netflixes and Maker Studios of the world — in other words, startups in Europe that straddle the media, entertainment and technology verticals. Average initial investments will be around £10 million.
The news comes on the heels of another European fund unveiled earlier this month from Balderton: $305 million for seed and early-stage investments.
Station 12 — named after a 1940s UK intelligence hub – is being led by Patrick Bradley, the former CEO of Ingenious Ventures, which has a similar portfolio approach to Bradley’s new venture. Notable exits there include the gaming company Lionhead Studios, sold to Microsoft and Cream, sold to Live Nation; investments include the property search platform Property Network and Two Way Media, which develops interactive services for TV programs.
Ingenious Media, under the direction of a new Patrick (Patrick McKenna), will be a “supporter” of Station 12, without specifying what that will mean, but potentially may point to co-investments or other collaborations.
Bradley tells me that Station 12 is currently laying “strategic cornerstones”, with the formal fundraising to start in early summer. He says he’s “absolutely confident” of the target size of the fund. “There is huge interest in the area where entertainment and media meet technology, partly because of the overall view of the tech sector, which a lot believe that is overvalued,” he tells me.
At the same time, there are a couple of other opportunities Station 12 hopes to seize. The first of is the maturation of business models based around technology. “The market is moving back towards quality content, towards what is glueing users to these tech platforms,” he says.
The second is the fact that there is still a sizeable funding gap in Europe for startups that are looking for their next stage of growth. “In the U.S. you have deep pockets with capital available from startup to mid-stage rounds,” he says. “But in Europe, there is a shortage of capital from Series A onwards. You have a cohort of young businesses coming up that will reach Round A or B, and want to raise in the £5 million-£15 million range, but there is a shortage of that in Europe.”
That predicament has found a willing complement in the U.S. up to now for tech startups: European startups that have established a product often turn to the U.S. not just for funding but also to “crack” the U.S. market, with the two effectively going hand-in-hand.
But Bradley believes that startups in the entertainment/media/tech category that Station 12 is addressing have an opportunity to develop differently, with strength gained by focusing here instead. “Europe is the largest media market outside of the U.S., and you’ve only got to look at the Nordics to see how successful they’ve been in gaming and media,” he says. “Investors are waking up to this and realising that they should be allocating more to this market because it’s huge.”
In some regards, you can see how media and entertainment plays may have an advantage by focusing first in specific regions — and Twitter’s recent acquisitions of social TV startups in the UK (SocialSync) and France (Mesagraph) demonstrate that this focus can eventually be a value in itself.
So Station 12 will be meeting that focus by backing companies where it can be a regular advisor. “As a startup, you want to be close to your investor, and right now there aren’t that many funds that will get on a plane to Berlin or London to see your portfolio companies that frequently. There is an opportunity in Europe for a VC that understands the European environment and culture and helps the company link up in the wider world.”