Confirming my story last month, 3i is indeed leaving early stage venture capital. The UK-based VC and buyouts house is merging its VC unit with its growth capital unit, confirms PEHub. The new focus for 3i’s venture chief Jo Taylor will be later stage technology, media and telecommunications and healthcare.
The loss of 3i is a blow to European venture capital, though not unexpected in 3i’s case as the move had been rumoured for a while and reflects a wider trend away from early stage amongst bigger venture houses. Although Index Ventures closed a €400m growth fund to invest between €20m and €50m per company, this is aimed at companies too large to fit into early-stage investing models and too small for the larger, private equity firms like 3i. Dow Jones VentureSource reveals that European VCs are focusing on later-stage deals with VCs investing €2.07bn in later rounds in 2007, up 13% from 2006 and the highest amount since 2001.
Now, I don’t now about you but I am a little depressed at this news. Every day I see new UK and Irish startups hungry for early stage seed capital but the hurdles to getting at it now seem higher than ever. Yes, there is more money around than before, but it has become much more focused and the bar has been pushed higher. In some ways this is no bad thing. But I would like to see more evidence that the seed stage and Angel sector is stepping up to the plate. As a result, the whole issue of accessing Angel investment for tech startups is an area I plan to concentrate on in the coming months, so please keep me in touch with your experiences, (on or off the record…).