Make way for another VC firm in Europe: Today sees the launch of Connect Ventures, a new London based fund that will focus on seed and Series A stages in European tech companies. It’s kicking off with €16 million ($22 million), which will be dispersed in investments of between €250,000 and €1.25 million ($330k-$1.7m).
Led by co-founders Pietro Bezza and Bill Earner, Connect Ventures will be focused on early stage companies in the consumer web, digital media, e-commerce, entertainment and gaming sectors. The first recipient of money from the fund is the London-based private sales site SecretSales, which is getting a £300,000 ($487,000) investment on top of the £6.3 million ($10.2 million) round that it got in February from a consortium of investors that included Doughty Hanson, Pantech Ventures and others.
And another two investments are close to completing: for an e-commerce company in Berlin and another London startup, focused around mobile apps. “One has revenue worked into its business model already, while the other is a bigger play that won’t have revenue for a while,” Earner says.
Some believe that the venture capital world may be getting a little overcrowded and overheated, with firms doing battle to get in on funding rounds for the choicest startups. So why launch a new fund now? For one thing, says Earner, the situation is less hot in Europe, and he says there a “gap” in the market for funding in the seed and Series A stages in tech here to help them grow faster.
“Not every startup has the privilege of going quickly from a few hundred thousand users to 20-30 million,” he says. “There are still opportunities to invest in really great companies that are not so hot that larger funds will get them automatically. We feel that those [smaller companies] could be attractive investments for us.” The goal is for this first fund to grow to €43 million from its current size of €16 million for such investments.
Secret Sales, he says, is a good template for how Connect Ventures wants to approach investments in the future: CV gives financial help, but also expertise — Earner is ex-Amadeus Capital Partners and has also worked at a number of startups in engineering, product management and marketing roles. Bezza has built and sold two digital media companies of his own, Neo Network and Magnolia, now part of the Zodiak Media Group of content companies, and has been an active angel investor in companies that include Picklive, PlusPlugg and Dri Dri.
“We invested in Secret Sales because we really liked the team and it has good investors backing it. We felt it would be good for us to be investing with quality investors like that,” Earner says. “Plus there are some specific skills that we are able to help out with, for example in areas like CRM and analytics. We see a valuable role for us there.”
The first targets within Europe, says Earner, will be startups in London and Berlin, where there is already “a lot of energy and startup activity.” Further along, he believes that there is a lot of undiscovered startup talent out there, and at least in one case his partner’s own background may help them in this respect: “There is a surprising number of good companies in Italy,” says Earner. Italy, he notes, has no hub in terms of a city where they have all converged, and that’s made discovering them more challenging.