It was no surprise last fall when General Electric’s GE Equity group launched its first venture capital fund aimed at providing the monetary fuel for early-stage Internet startups. After all, the spirit of Netpreneurship starts at the top at the $100 billion industrial, consumer, and financial conglomerate where CEO and Web zealot Jack Welch challenges his managers to develop a “destroy your own business dot-com” model.
The lesson in GE’s new eFund, though, was in geography. GE sent the $150 million money chest straight to Europe, marking the first time it turned funds loose anywhere on early round deals. GE Equity has focused its U.S. venture backing on later stage firms.
GE is just one of many U.S. venture capitalists looking to the Old World for new money. Endearingly regarded as American cowboys, U.S. VCs are riding in with checkbooks in their saddlebags, eager to capitalize on an Internet boom that is hitting full stride. “Yes, we are interested in Europe,” says Tim Draper, partner of one of Silicon Valley’s leading venture firms, Draper Fisher Jurvetson. So interested, in fact, that Draper plans to open a London office this spring and to sign partnerships with venture firms in Germany and Israel.
When Draper and his partners arrive, they can expect to find plenty of other American VCs sniffing around for Net gold among European content and infrastructure providers. In addition to GE, other American firms that have recently launched funds targeting the germinating European Net market include Washington, D.C.-based The Carlyle Group (fund size: $366 million), Radnor, Pa.-based Cross Atlantic Capital Partners ($180 million) and New York-based Geocapital Partners ($190 million). In October, Chicago-based venture firm Madison Dearborn Partners invested $21 million for a minority stake in London-based bandwidth exchange Band-X.
Minneapolis-based Crescendo Ventures (formerly IAI Ventures) opened its doors in London in October. New York-based online investment bank Wit Capital, which in October joined forces with Dublin-based online financial services firm ENBA to form Wit Capital Europe, plans to start offering the European public access to venture capital funds sometime early this year. All these developments follow in the footsteps of Greenwich, Conn.-based General Atlantic Partners (a Priceline.com seeder), which has been investing in Europe for nearly a decade.