The London VC community has been buzzing with rumors since the end of last year about one particular firm and its next moves. That firm is Balderton Capital, considered one of the few, large VC firms in Europe, with more than $1.9 billion of committed capital. Balderton was one of the main beneficiaries of the $850 million exit of Bebo to AOL, and now counts firms such as Tictail, Qubit and Vestiaire Collective in its wide portfolio. Balderton’s last fund — Fund IV — closed in 2009 at just over $480 million. In its VC peer group, Accel Europe raised €359m in 2013 and has €1.5bn funds under management, while Index Ventures has €2.5bn under management and last raised its €350m fund in 2012. These funds are playing up and down the spectrum, from early to late stage. The question was, what was Balderton’s next play? Well, tonight it confirmed the rumors: one partner is taking a step back, another joins and the firm is now ‘doubling down’ to become a ‘mainly Series A’ VC in Europe – an equity gap which badly needs filling.
Suranga Chandratillake, founder of internet media company blinkx, will join as a General Partner. After 10 years based in Silicon Valley, UK-born-and-raised Suranga (36) will return to live in London and help lead early-stage investments in the online media and enterprise sectors.
Suranga founded blinkx, the intelligent search engine for video and audio content in Cambridge in 2004, later taking the company to San Francisco. It IPO’d on the London Stock Exchange in 2007, valued at $250 million (£125m) and was one of the best performing companies on the FTSE AIM 100 in 2013. Its now valued at over $1.3 billion (£855m) and is one of a small number of home-grown UK technology companies to have exceeded the $1 billion market capitalisation. Blinx generates revenue from online advertising and has 171 million users a month.
Back in 2012, Suranga stepped back from day-to-day management of blinkx to become the company’s first Chief Strategy Officer. effectively this was like becoming the Chairman, but he focused on strategy and product. . He’ll continue in this capacity and remain a director on the Board of blinkx, alongside his new position at Balderton. Before founding blinkx, Suranga was the US CTO of Autonomy, which sold to Hewlett Packard for $10.2 billion.
Chandratillake said: “Balderton is a natural fit for me. They are a smart, lean and driven team that makes high impact decisions and has the flexibility of thought and action that fast-growing technology companies need from their partners. The firm also has a strong Silicon Valley heritage, complementing my own experience, and can bring the US mindset to European venture exceptionally well.”
In a phone in interview he told me he “really loves” developing early stage companies and was approached by Balderton about the role last year.
“The VC industry has not changed as much as the entrepreneur community so I’m excited to be a rare commodity as a former entrepreneur, now a VC,” he said. He added that he is excited by the potential for European startups.
The second piece of news is the confirmation of the widely-mooted move of the firm towards Series A rounds. This was first indicated by the move of Daniel Waterhouse from Wellington Partners (which has €800m under management and last raised a €265m, largely science-based, fund in 2012) to join Balderton as a General Partner, focussing on early stage investments in the software and internet sectors.
The focus on Series A appears to have been coming for a while. Looking at Balderton’s recent activity last year. It’s done a number of Seed and Series A rounds, with a smattering of participations in Series Series C. But Techcrunch understands that the firm now wants to be known “as a pure-play Series A VC” and “usually the first institutional investor in early stage funding rounds” (said a well-placed source). This means Balderton is, to some extent, returning to its original roots – before it went independent – as the European arm of Benchmark Capital, which operates in a similar manner in North America.
However, these latest moves fully refresh Balderton’s team. Chandratillake, like his new fellow General Partner Bernard Liautaud, has managed to be one of the few to lead a European tech firm towards a $1 billion+ valuation. Liautaud co-founded Business Objects in August 1990 and led the company until it was acquired by SAP in 2008 for $6.78 billion.
Liautaud, general partner of Balderton Capital, said in a statement: “As the architect of one of the UK’s most successful internet technology companies, Suranga will be a great addition to our team as well as an invaluable mentor to the companies in our portfolio. He understands what it takes to create global and long-lasting businesses… Suranga’s commitment to returning to London after a decade in Silicon Valley signals how closely he shares our confidence and enthusiasm to identify and back the next generation of European entrepreneurs.”
Thirdly – while the firm is remaining coy about this move – TechCrunch understands that General Partner Barry Maloney (who previously led deals in companies such as Bebo, Rebtel and more recently Vivino) is effectively stepping down from the firm, while at the same time remaining an active adviser and board member with the firm’s existing investments. It would appear to be a natural move. Over his 12 years at the firm Maloney (formerly the CEO of Esat Digifone, Ireland’s second largest GSM mobile operator, later acquired by British Telecom for IR£2 billion) was best known for dealing in telecoms-style investments rather than the early stage online media and enterprise investments Balderton now looks to be focusing on.
Balderton has invested in over 100 companies, principally across Europe. Notable realised investments include Betfair (the online betting exchange, 2010 IPO), LOVEFiLM (the home entertainment subscription service, sold to Amazon in 2011), MySQL (the open-source database software, sold to Sun Microsystems in 2008), YOOX Group (the online retailer of leading fashion brands, IPO in 2009). Yoox is now worth $2.5 billion.
TechCrunch understands Balderton is looking to take three to four of its portfolio companies onto a public listing this year. Another investment, The Hut – the online retailer of clothing, gifts, beauty and home products – could well IPO, for instance.
The current portfolio includes innovative companies such as 3D Hubs, Globoforce, Kobalt, Natural Motion, Openet Scytl, Talend, Wonga, Wooga and WorldStores.
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