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2006 Early Stage Venture Capital into European Web2.0

I have now pulled together all the numbers for European Seed and First Rounds into consumer and internet businesses in 2006.  (The final list is  at the bottom of the post in all its glory). 

So what are the headlines?

European Web2.0 investments are BIG and have skyrocketed from last year. 

More than £144mn was raised in Europe across seed and first rounds in 2006 by 54 European web2.0 companies.  This total doesn’t include the “undisclosed investment” rounds, of which there were 16.

The growth is remarkable. 

In the UK in 2005, just £24mn was invested into web2.0 companies.  In 2006 that figure increased threefold with £79mn worth of early stage investments into 21 companies.

VC investment patterns are changing

Active VCs

Index Ventures is the most active. No surprises there.  But a quick look at their syndicate partners shows the (re) arrival of the Americans. Sequoia doing a first round in Europe!? Rather surprisingly the active investors aren’t just the London based mega-funds like Benchmark and Accel: Great to see Mangrove coming out on the front foot after the success of Skype.  Finally the activity of not usually headline grabbing Nordic Venture Partners.

Investment strategy

Astonishing that we don’t see any investments in the area from 3i.  I would have expected to see something from them, not just because they’re the biggest and oldest player in Europe, but also because in 2006 they recruited the incredibly web-savvy Daniel Waterhouse from Yahoo!  Maybe 2007 Daniel?

Also interested to see Atlas Ventures back with a vengeance.  Their investment strategy seems to be following copycat models Daily Motion (YouTube), Koodos (Yoox), and I understand another business (to be announced) is also directly competitive to a UK venture backed web property.  Is this accident or design Fred? 

Range of web businesses

Companies that make money

Good to see that many of this new breed of web company has very explicit revenue generating capabilities; they are either stores/services (Wiggle, Stardoll, Moo.com), or they facilitate the process of buying/selling somehow.

Models that build on models

I am really interested to see two types of companies using third-party web-services as a platform. Firstly, eBay is the platform for two VC backed businesses.  Autoquake  helps people sell their cars on eBay, auctioning4u helps anyone sell anything on ebay.  Secondly there are web-services which serve parts of their sites onto other peoples. Examples include Reevoo  serving their genuine customer reviews onto retailers sites, or Dailymotion allowing bloggers to show video on their
sites.

Ecosystem 2.0

European politicians should be delighted that we have a thriving entrepreneurial ecosystem which they have been attempting (hoping) to build to compete with the USA, principally the West Coast. 

Interestingly, this ecosystem is not centering on the Universities or the government sponsored funds.

It is instead the Silicon Valley model of second time round entrepreneurs, experienced business angels and VCs who have already been through a few cycles.  So we see the team behind Active Hotels either as Execs or Angel investors at Reevoo.com .  We see Mel Morris of match.com as an angel investor into SoFlow.com.  Firebox founder Michael Smith doing it again with Mindcandy. Pierre Chapaz, founder of Kelkoo.com is now at Index Ventures. We see  second time round entrepreneurs are Eyeka (CEO Giles Babinet sold Musiwave), the Skype guys doing The Venice Project & Fon's Martin Vavarsky previously founded Ya.com and Jazztel.

Company	Investors	Description	£MM	Location	Round	Date
Aggregator	Amadeus , Intel Capital , 3i	WebTV	9	UK	1	Jul-06
All Peers	Index Ventures , Mangrove	Private P2P media sharing	W/H	UK	1	Mar-06
Auctioning4u	Foresight Venture Partners	eBay drop-off stores	2.2	UK	1	May-06
AutoQuake	Accel Partners	Sell cars over the web	3.4	UK	1	Jul-06
Bebo	Benchmark Capital	Social networking community	8.5	UK	1	May-06
Exabre	Eden Ventures	www.thefilter.com itunes plug-in. Last.fm-esque	W/H	UK	1	N/D
Koodos	Atlas Venture	End of line retail.	W/H	UK	1	Jun-06
Last.fm	Index Ventures, Atomico	Consumer audio filter	2	UK	1	May-06
Mform	Artemis	Online mortgage comparison	2.5	UK	1	Sep-06
Mind candy	Index Ventures , New Media Spark	Online / offline games	3.97	UK	1	Oct-06
Moo Print	Atlas Venture, Index Venture	Customized printing solutions	2.83	UK	1	Apr-06
Murcia Solstice	Enterprise Ventures	Web and text social network	0.55	UK	1	N/D
Netvibes*	Index Ventures , Accel Partners	Ajax desktop / DLA /Filter	8.17	UK	1	Aug-06
Reevoo	Eden Ventures	Online publisher of genuine customer reviews	2.5	UK	1	Dec-06
Seat Wave	Not disclosed	Viagogo lookalike	W/H	UK	1	N/D
Skinkers	New Media Spark	RSS publishing	2	UK	1	Jan-06
Soflow	Kodiak , Northbridge	Social networking for  professionals	2.8	UK	1	Mar-06
Viagogo	Index Ventures, Atomico	Online Ticket exchange	9.9	UK	1	Jun-06
Wayn	Esprit, Angels	Social Network for travel	5.5	UK	1	Nov-06
Wiggle	Isis	ecommerce: online retail	12.5	UK	1	Jul-06
Yuuguu	Enterprise Ventures	Enterprise collaboration	0.6	UK	1	Oct-06
Jalbum	Nordic Venture Partners	Web photo album tool	W/H	Sweden	1	Jul-06
Polar Rose	Nordic Venture Partners	Online photo search	2.72	Sweden	1	Jul-06
Stardoll *	Index Ventures , Sequoia	Online dress-up community	6	Sweden	1	Jun-06
Fon *	Sequoia , Google , Index	WiFi sharing	12.33	Spain	1	Feb-06
Properazzi	Mangrove, Angels	Property Search	W/H	Spain	1	Nov-06
ebuddy	Lowland Capital	Multiformat IM	3.41	Netherlands	1	Oct-06
Spotzer	Undisclosed	Ready to air video advertising	W/H	Netherlands	1	Jun-06
Pigsback	Angels	Consumer coupon and discount site	2	Ireland	1	Oct-06
SevenLoad	New Media Ventures, Stroer	Video platform & white label service	W/H	Germany	1	Nov-06
CoComment	Netage Capital Partners	Blog comment tracking	0.75	Germany	1	Dec-06
DJTunes.com	High Tech Gründerfonds	Online music Download	0.3	Germany	1	Dec-06
Imageloop	Angels	European Slide.com	0.6	Germany	1	Dec-06
Kimeta	High Tech Gründerfonds	Vertical Search (jobs)	W/H	Germany	1	Dec-06
Locr	High Tech Gründerfonds	Photo Tagging	0.39	Germany	1	Dec-06
Nachtagenten	Burda Digital Ventures	German Clubbing Social Network	W/H	Germany	1	Dec-06
Page Flakes	Benchmark	Ajax desktop / DLA /Filter	W/H	Germany	1	May-06
Qype	Partech , Advent Ventures	Local search services	W/H	Germany	1	Aug-06
Spreadshirt	Accel Partners	Consumers design  T-shirts,	W/H	Germany	1	Jun-06
Wazup	Innovacom & Wellington Partners	Game Search Engine	5.20531	Germany	1	Dec-06
Criteo	Elaia, AGF Private Equity	Recommendation engine	2	France	1	Apr-06
Dailymotion	Atlas Venture , Partech	Euro YouTube	4.77	France	1	Aug-06
Eyeka	DN Capital , Ventech	Mobile video and image market	2.72	France	1	Feb-06
Kewego	Banexi Ventures Partners	UGC Video	3.4	France	1	Apr-06
Olfo	Members-only e-commerce	Edmond de Rothschild, OTC Asset Man.	2.1	France	1	Dec-06
Viaduc	AGF Private Equity , Ventech	Viadeo.com is social networking for  professionals	3.4	France	1	Jun-06
vPod.tv	Innovacom, Angels	Online video	2.5	France	1	May-06
W2.Media	Angels	www.Vozavi.com "consumer expert" decision-making	0.8	France	1	May-06
Wikio	Loic Le Meur, Martin Varsavsky, Pierre Chappaz, Jeff Clavier	User managed news search engine	W/H	France	1	Jun-06
Yoono	Social Bookmarking	AGF Private Equity	1.02	France	1	Aug-06
Igglo	Benchmark , Taivas	UGC Real estate	8.51	Finland	1	Oct-06
Quintura	Mangrove , OpenView	Visual Search	W/H	Europe	1	Nov-06
Joost	Not disclosed	Non-linear webTV	W/H	Europe	1	N/D
Zyb	Nordic Venture Partners	MobilePhone backup	0.6	Denmark	1	Oct-06

A vintage year for investing. I am honoured to be working with the entrepreneurs who are driving it. Of course, the real test for us all comes of course at exit….

Methods. This has been a mixture of old fashioned primary research, desk research and most significantly help from readers: thanks to all those who posted or wrote with deal deals, many of which were missed by the mainstream deal databases.

*These deals have had Seed and First rounds in 2006 and total funding has been summed in the table

Reference sources used: Venture Source, CalibreOne research

2006 Venture Capital Investment into European Web companies

2006 Internet and media investments

It’s a little premature to be releasing any numbers, but I have been taking some time to look over the deals done so far this year at Seed and Series A Level.

As I noted when First Capital ran the web2.0 event last year, I was convinced that we would see not only more deals into European web companies but also a significant up-tick in the amount invested. Just from the list of companies noted below, you can see we’re already far ahead of last year’s numbers.

 
The list is interesting as it shows new investors to Europe (who’d have thought we’d see Sequoia active here?), some other investors appear to have woken up. The type of companies are fascinating too: Far more online-offline models such as Moo and Spreadshirt, some of the filter technologies that excite me so much like Netvibes, PageFlakes and Last.fm, and also a new breed of online media properties like the wonderfully named DailyMotion.

Worryingly I also see a few directly competitive investments from competing VC firms… feels like 2000 again.

Dear reader, this is not yet a complete list, and I need your help. Which have I missed or got wrong? I know are few are missing but they not closed yet ;) but there's others I will have just overlooked.

Send me mails if I’ve missed stuff off (remember only seed and first rounds, only European companies) and I will publish the complete list with investment amounts at the end of the year.
 

2006 Consumer internet and media investments

Seed and Series A Level

The story so far...

2005 Venture Capital Web 2.0 investment statistics: US entrepreneurs raise ten times more than Europe

We have used the traditionally-quiet holiday period to keep ourselves very busy running some research on venture capital investment into Web2.0* companies.

Why did I want to run these numbers?

It is obvious to me that there is a high interest-level amongst European VCs in the sector, yet I was seeing a very low level of Web2.0 “done deals” in VC portfolios and on the deal sheets.

Furthermore, when we ran our Web 2.0 European event, we noted an under-supply of European entrepreneurs with compelling Web2.0 businesses.

So I was expecting the stats to show low levels of investment into Web2.0 companies in European compared to the US. However the discrepancy was even greater than I had expected.

In 2005, US-based Web2.0 companies reported raising £200mn whilst European businesses raised just £24mn.

Both geographies had similar (ish) proportions of investment at the first round: 59% of US deals were first rounds compared to 47% in Europe.  Tellingly however, there was a skew in Europe towards earlier stage deals: seed rounds constituted 13% of all activity in Europe compared to 6% of deals in USA.

Be warned however, because I think it’s too early to start drawing any harsh conclusions on European entrepreneurs or VCs.

Frequently, we see European VC software investment trends trailing the US by anywhere from 3 – 12 months.  I’m pretty excited by the range of European Web2.0 entrepreneurs that I’m meeting today. I also know there are some interesting deals currently “in process” at many VC houses.  I’m looking forward to seeing the European numbers catch-up.

* A quick word on methodology: “Europe” refers to West and East Europe and also Israel. Web2.0 is defined as company fitting the Tim O’Reilly description (see previous posts). Data was sourced by primary research, press releases, techcrunch, company calls and the VentureSource data base.