Index Ventures

In his book, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail, Clay Christensen authored one of the most influential thought pieces to impact the technology community. His core thesis was the successive generations of technology coming from the low-end market niches disrupt mainstream market leader as they attack incumbent products by improving the low-end technology to subsume the price/performance of the mainstream products.

Together we can get the Tech IPO market going in London

From our vantage point at Index, the centrality of the Tech sector to economic growth -- particularly during the economic slowdown of the last few years -- is all too clear.

A recent piece in the FT reiterated this point. Ed Hammond, the paper's property correspondent reviewed the shifting make-up of the City and the steady transformation of the tenant mix in the Square Mile.

In the venture capital business, you occasionally see companies rising from the ashes of a venture disaster. Companies go down to their last month of payroll and yet find a way to survive and, later, flourish. But rarely do you see a once-publicly-traded company de-list itself and find a way to package together winning technology architecture and a brand new business.

I have worked in and around technology since 1993 with some of the world’s most amazing developers in Boston, Seattle and Tallinn. But I am a literature major who never learnt to code beyond some very basic BASIC on my BBC Micro in 1983.

Today we’re delighted to announce our new €350m early stage technology fund. It’s the final piece of €1bn of new capital we’ve raised in the last 12 months to complement the international platform we have been building to invest in both early stage and growth technology as well as life sciences companies.

While investors, (myself and my partners included) entrepreneurs, politicians and government officials collectively ballyhoo the coming of age of the London start-up scene and its steady stream of high-caliber entrepreneurs pursuing bold plans, we seem to be glossing over the fact that a key component of the ecosystem is sorely lacking. As the the US continues to churn out high profile IPOs for Zynga, Groupon, Linkedin and Facebook, the London IPO machine is eerily silent.

Today’s news that Just Eat has raised $64m to complete their European conquest and continue their expansion outside Europe (India, Canada, Brazil, etc.) is validation of a both a winning recipe and talented team of chefs. As with all businesses however the path to success curved around many blind corners. When Index Ventures first invested in 2009, the seeds of success may have been sown, but a number of risks and challenges lay ahead for the Company. I’ve gone back to my original notes from 2009 to look at risk factors my colleagues and I identified and the key questions we discussed before our original investment and provided a brief update on how the Company has progressed.

There’s just something about entrepreneurs. Irrespective of what business they’re in, there’s an energy and intensity about them that marks them out from others and makes them easy to spot. Of course if that fails, the big giveaway is that they’re the ones who aren’t in suits, but still step out of the restaurant to take a conference call at 10pm. The way I see it, anyone can be an entrepreneur, what marks out the real deal is the restless energy, constantly calculating angles and reassessing plans of attack. In fact a long time ago I came to the conclusion that this is a compulsion, not quite a disease, but with many signs and symptoms which sometimes make it look like one.

I had a professor in college who explained financial markets by saying the that world was full of those looking to receive and those looking to provide certain cash flows with very specific parameters, such as timing, size, yield, currency, etc. The role of the financial markets and their facilitators, he said, is simply to match these cash flows.

In his blogpost David Grainger, calls it “chocolate flavored-poison”: creating biotech companies with multiple drugs to diversify risk makes us feel more comfortable about the endeavor ahead, but in the end it does more much more harm than good. Here’s why.