Where will the next billion-dollar startups come from? The tech world and most VCs tend to be parochial, looking at Silicon Valley, maybe New York, and a few other hot markets like China and Brazil. But what about the Old Country?

Yesterday, I was having coffee with Saul Klein, a partner at Index Ventures and co-founder of Seedcamp. He believes that in every major city across Europe, Russia, and Israel, there are “a legion of companies that are capable of achieving billion dollar valuations and in some cases are likely to be able to do close to a billion dollars in revenues over the next 3 to 5 years.”

I asked him to name five while I pointed my iPhone video camera at him, and he was able to give me a much longer laundry list , which I’ve added below (along with some others he sent me afterwards). I’ve indicated which ones are Index investments and where each one was originally founded. Which of these will get into the billion-dollar club? (Note that some of these already are billion-dollar companies. You can click through to their Crunchbase profiles to learn more about each one).

Skype (London, Index)
Playfish (London, Index)
Wonga (London)
ASOS (London, Index)
Mind Candy (London Index)
Net-a-Porter (London, Index)
Betfair (London, Index)
Klarna (Stockholm)
Spotify (Stockholm)
Wix (Tel Aviv)
Conduit (Tel Aviv)
Fon (Madrid, Index)
Privalia (Barcelona, Index)
Criteo (Paris, Index)
Vente-Privee (Paris)
SoundCloud (Berlin, Index)
LogMeIn (Budapest)
AVG Technologies (Prague)
Kaspersky Lab (Moscow)
Ozon (Russia, Index)
Yandex (Moscow)
Mail.ru (Moscow)

In the online advertising world, one of the hottest trends right now is what is known as ad retargeting. The idea is simple. When you visit a retailer’s or other advertiser’s Website, it drops a cookie on your browser and the next time it sees you pop up on another site it loads an ad from that retailer. You’ve already expressed interest in that advertiser by visiting their site, so they retarget you whenever they can. It may sound a bit stalkerish, but trust me, everyone is doing it.

One startup in particular claims to do it better than anyone else, a French company called Criteo. CEO JB Rudelle says Criteo is the dominant retargeting ad network in Europe, and now he wants to dominate the U.S. He’s already moved his corporate offices from Paris to Palo Alto, and now he just raised $7 million in a C round from Bessemer, which took the entire round. Bessemer partner Byron Deeter will join the board. The last time he raised money was from Index Ventures in 2008. This last round brings his total capital raised to $24 million.

He doesn’t really need the money. Criteo already employs 140 people worldwide, operates two large data centers in the U.S., and is profitable, says Rudelle. Unlike most other ad retargeting technologies, Criteo puts its money where it’s mouth is and charges on a cost-per-click basis. No clicks, no money. It buys up ad inventory on an CPM basis (per impression) and sells on a CPS basis (per click). “The conversion rate is similar to paid search,” he says of Criteo’s retargeted display ads. Retargeted ads are typically clicked on four times more than a traditional run-of-site banner ad, he estimates.

“We see on average someone needs to visit 5 times before buying anything,” says Rudelle. “We show them in the banner either exactly the product they were looking at or similar product they are likely to buy or complementary products.” For e-commerce advertisers Criteo takes a feed of their catalog and creates new banner ads on the fly populated with the right image, price and a deep link to that product page on the retailer’s site. Each ad is unique for each target consumer.

So go ahead and make your French Resistance jokes if you want to, Rudelle is laughing all the way to the bank.

Outbrain is creating a ratings and recommendation platform for blogs and news feeds. So far it has developed a rating widget that can be placed at the end of every blog post or news feed item so that readers can rate each one. Outbrain wants to use these widgets to create a cross-blog/news recommendation system using collaborative filtering techniques similar to what you find on Amazon.com for products. “Readers like you also liked:” X. Nobody has to register. Outbrain makes its inferences anonymously based on cookies. Explains Galai:

With every rating that’s cast to our system, we constantly tweak the ‘closeness’ of each reader to all other readers who ever rated anything. We then give your like-minded readers a higher weight when making recommendations for you. So the more items you rate (and rate honestly), the better your personalized recommendations should get.

This is in contrast to the folks that do ‘related articles’ functionality which is based purely on the content of the post. Those by definition are one-size-fits-all recommendations which we do not believe are very effective. So while others try to target recommendations that are relevant to the content, we are trying to target recommendations that are relevant to the readers.

Outbrain’s widget can be installed on most blogging and RSS platforms, including Blogger.com, TypePad, WordPress.org, Drupal, FeedFlare, and MoveableType. Bloggers can grab it here. It competes with other rating and recommendation widgets out there, including JS-Kit’s rating widget and Criteo’s Autoroll widget that creates reader-centric blogrolls.

Criteo sells recommendation-engine software to e-commerce and content sites. Competitors include Aggregate Knowledge, CleverSet, and ChoiceStream. Discovery is hot right now. For instance, Kleiner-backed Aggregate Knowledge has raised $25 million. It is good to see some competition stirring across from across the pond.

Incidentally, Criteo is probably best known among bloggers in the U.S for its AutoRoll widget that generates a linkroll based on the reading habits of a blog’s readers. Any blog that has the AutoRoll widget on it will show the other top AutoRoll blogs that its readers have also visited. There are 12,000 blogs with the AutoRoll widget (I used to have one on my old blog, the Next Net). It is an interesting idea, but hasn’t quite reached critical mass yet. Good thing the AutoRoll is not Criteo’s main business driver.