European VC investment strategies – and web2.0 plans
25th of January 2007 by admin
Barry Maloney, Partner at top VC firm Benchmark [ex-digifone], Irish man, was quoted in a recent FT report on European investment in “web2.0″ space.[original research was from Paul Fisher at First Capital]
Quote: [fixed the bad spelling of Maloney]
Barry Maloney, partner at Benchmark Capital Europe, said recent transactions, such as the sale of Youtube to Google for $1.65bn and the sale of MySpace to News Corp for $580m, have fuelled interest in websites focused on user-generated content, also known as web 2.0 companies.
These companies are also much cheaper to set up than other technology businesses.
It is very difficult to build up a semiconductor company or an enterprise software business. You need to invest $40m to $50m before you know if you have a product that works, Mr Maloney said. With web 2.0 companies you can find out after three or four million dollars whether it will work.
As a result, Mr Maloney said, many European venture capital companies were using a spray and pray strategy, spreading small amounts of investment over dozens of companies in the hopes that two or three would make it. “