Why you shouldn't be too excited about Index's new €350M fund for early stage "European" startups


GigaOm Europe  reported this morning that Index Ventures raised another round of €350 Million to invest into early stage European startups. This is pretty great news – Index, along with Accel, is one of the few real Global investment firms that has both a strong presence in the US and in Europe. In New York, Index invested early on in Flipboard, along with Dropbox, Facebook, Etsy and more. In Israel, Index invested in Zend, a company who early on predicted the success of PHP and build a products and services for the language. More recently, they’ve funded iZettle, the”European Square” which is looking to bring a Square-like Mobile payment system to Europe. On the French side, they’ve got Criteo, Netvibes, and — well, that’s about it. Hmm.

Don’t get too excited France, Index hasn’t invested in France in over two years

May of 2010, Index announced their infamous investment in NormOxys. What’s that? You’ve never heard of NormOxys? You must not be up to date on your PharmaTech startups – NormOxys, a Boston headquartered company, does all its Pharma research in Strasbourg, France. I said it last year, Strasbourg’s amazing in PharmaTech[TC]. Nonetheless, before that, we’ve got Criteo in January of 2008 & Netvibes in May, 2006 – you can see everything in between on their portfolio page.
Using Index’s own filtering system on their portfolio page, you can distinguish between seed stage, early stage, and growth stage, as well as by location. Surprise surprise – the number of UK investments outweighs the number of investments in all other European countries combined – and that’s including Life Sciences and growth stage investments. Drill it down to just “early stage” and the investment numbers look pretty grim.

Photo Courtesy of Daily Mail

Their second biggest investment country, by the way, is Switzerland. So, an American’s intelligent takeaway from this is that the UK and Switzerland are pretty representative of “Europe.” You may hear a feint laughing sound creeping out of your speakers or headphones – that’s because anyone living in what I would call “real Europe” (i.e: the part of the EU where you don’t need to show a passport to enter/leave) knows that these are the two countries that would be voted most unpopular if Europe had a high school yearbook. I thought about going and talking to Index about it, so I looked up the nearest office to me in Paris – my choices were their London-based office or their Geneva-based office. Go figure.
I don’t want to totally cut them down, because they are obviously investing in great startups – and even distribution of investment money by location is obviously not practical or smart, but it’s worth nothing that they’re a lot closer to ignoring regions all together than they are to investing in a country just for the sake of encouraging growth. Their most popular investment, iZettle, is a Swedish company (Sweden is a different country than Switzerland, for the American readers) – I can’t wait to test their service once it launches in France. It’s currently available in Scandenavia and, oh, the UK, what a coincidence.

Local still wins – Everytime. Always.

So, 350 million euros is on the table, up in the air – unfortunately, Index’s tables and air are located in London, Geneva, Tel Aviv, New York, and the Silicon Valley. I think I’ll wait until Index comes to real Europe to start cheering for their new funds.