Friday, April 23, 2010

TAG and Index get together to drive Seed investing.

Image representing The Accelerator Group as de...Image via CrunchBase
The ecosystem has been alive with reams written about how active angels are becoming, how VCs have gotten too large, how companies need less cash and how the VC model is broken. And of course, there is the perennial complaint about the lack of early stage capital in Europe. [see links to some related articles below]

A number of the large US VC firms have made special arrangements or adjustments to their models, their PR or have re-emphasised their commitment to early stage and start-up investment.

Sequoia invested in or with YCombinator, Reid Hoffman joined Greylock, Andreessen Horowitz has been launched promising low friction, multiple investments in amounts ranging from $50K to $50m. They appear to have done 12 investments since August last year including 4 seed investments.

Super early stage investors with relatively modest fund sizes have emerged in the US - like First Round Capital, Union Square Ventures, True Ventures as have new institutional seed guys like Mike Maples and Jeff Clavier along with super angels -Aydin Senkut , Chris Dixon and the like.
Betaworks are building a different kind of incubator/investment company.

Whilst this is going on, we've seen very little from Europe's top tier-VCs.

Until now.

Index and The Accelerator Group (TAG) have announced a plan to directly address this opportunity.

Index will create Index Seed. In some ways similar to Index Growth which was announced in January 2008, Index Seed will benefit from clear focus, application of appropriate resources and a discreet pool of capital.

Index has invested continuously in seed since 1996 so this is no new space for them - on the contrary they are arguably the best tech seed investors in Europe. Inevitably, however, as the firm grew, the proportion of pure seed deals fell and with it the misconception grew that many deals were simply too small.

This will no longer be the case.
I will join Index as a venture partner - helping to lead the Seed investment activity together with Saul and with the support of Neil Rimer, Mike Volpi and Danny Rimer, (all partners in Index Ventures).

We will aim to make around 20 investments in the coming 24 months - with initial amounts from $50K to $1m. As TAG has done for many years, we will seek to invest alongside 'fellow travellers' - people with whom we have been investing for a number of years and the growing band of active angels in Europe and the US.

TAG will have co-investment rights in all seed deals but will have the freedom to invest on its own if circumstances dictate.

Some History:

Saul and Danny worked together first in 1995 in the US, while Saul was at Firefly & Microsoft and Danny was at H&Q (JP Morgan) and the Barksdale Group. As TAG, we worked with Index first in 2003 when they led the first institutional round of investment in our own startup, Video Island.....(which then acquired ScreenSelect, merged with LoveFilm)

We are co-investors in 14 companies (including Moo, My Heritage, Glasses Direct, OpenX, Stardoll, Moshi Monsters and LoveFilm). The introduction to these companies has been both ways - TAG's introduction to Index and sometimes Index inviting TAG's participation.

We know each other well and there is a congruency of purpose and values.

Despite this closeness, TAG has successfully worked, over many years with many other VCs such as Accel, Advent, Atlas, Balderton, Eden, Greylock, Octopus and Betaworks. Some of TAGs most successful investments like Wonga, Fizzback and Zoopla - as well as some emerging companies like Graze, MyBuilder, Bit.ly, Tweetdeck and FreeAgent - were made with these VCs and others.

A guiding principle for us has been that we never forget that we back entrepreneurs - the business is theirs and we are part of the support team - like their other team members. How much money? from whom? and when? is very much a team decision.

So, TAG will remain independent and Index Seed will seek to actively co-invest with 'fellow travellers' - large and small - at early stage.

There has never been a better time for technology Entrepreneurs.

It is thrilling for me to work closely with young, smart people who are - in many cases - genuinely changing the way in which people live or businesses work.

The leadership Index is demonstrating with its commitment to Seed and the eco-system in Europe and beyond is very significant and I am hoping its impact will extend far and wide.

Looking forward to hearing your views, comments, questions and will post again in week or so to expand on any topics.

For those unfamiliar with the TAG details - a short summary:

The Accelerator Group (TAG) is the father and son investment team of Robin (@robinklein) and Saul (@cape) Klein, which last year was recognized at Techcrunch Europa's as European investor of the year (http://bit.ly/2lhP3J ). TAG has actively invested seed capital in over 60 ambitious entrepreneurs with global ambitions in the last 12 years.

Some of TAG's 10 exits include Agent Provocateur (3i), Sit Up TV (Virgin Media), Lastminute.com (IPO), Last.fm (CBS) and Dopplr (Nokia) where we've had the pleasure to work with great European founders like Brent Hoberman, Felix Miller, Martin Stiksel, RJ, Marko Ahtisaari, Matt Jones & Biddulph, John Egan and Ashley Faull, Joe Corre and Serena Rees as well as superb seed investors like Stefan Glaenzer, Reid Hoffman, Joi Ito, Esther Dyson and Martin Varsavsky.

TAG currently has 44 active investments with some of Europe and the US top investors, including:

• Lovefilm (Index, Balderton)
• Stardoll (Index, Klaus Hommels)
• Moshi Monsters (Index, Accel)
• Moo (Index, Atlas)
• Fizzback (Advent, Sherry Coutu)
• Zoopla (Atlas, William Reeve, Alex Chesterman, Simon Murdoch and Sherry Coutu)
• Songkick (Jeff Clavier, Index, Stefan Glaenzer, Alex Zubliaga and Betaworks)
• Wonga (Balderton, Accel, Greylock)
• Tweetdeck (Betaworks, Ron Conway, ProFounders)
• Twitterfeed (Betaworks)
• Bit.ly (Betaworks, O'Reilly Alpha Tech)
• Erply (Redpoint, Index, Dave McClure, Aydin Senkut)
• Mashery (First Round Capital)
• Slideshare (Ariel Poler, Dave McClure)
• Amee (Union Square, O'Reilly Alpha Tech, Toby Coppel, George Coehlo, Amadeus)
• Graze (William Reeve, Octopus)

We've had a particularly strong relationship over the years with Index, doing more than a dozen deals starting from Lovefilm in 2003 and including Moshi Monsters, Stardoll, Moo, Songkick, GlassesDirect, OpenX, Netlog, MyHeritage, AstleyClarke. In some of these cases, TAG and Index co-seeded the company.

Saul founded Seedcamp 2007 and TAG has been active in supporting Seedcamp ever since, in addition to investing directly in Seedcamp teams like Zemanta, MyBuilder, Skimlinks and Erply. We have also actively invested in YCombinator companies for several years - companies such as Songkick, Habit Stream and WebMynd.

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1 comment:

  1. Congrats, Robin and Saul. And - even more congrats to the Index guys, well done. Can't wait for many more journey's together