US tech CEOs invest $80 m in European fund

LONDON: A European-US venture fund said on Friday that despite a moribund

technology market, it had raised $80 million for a new European investment fund.

Among the individuals investing in the Favonius Insight Ventures fund are Dell

founder Michael Dell, Kleiner Perkins Ventures partner Tom Perkins and Computer

Associates chief executive Charles Wang.

The fund, which can grow to a size of $200 million, also has institutional

investors such as Dutch financial institutions ABN Amro and ING, and

California's Calpers unit Grove Street Advisors.

The European fund, run by European management and a board of international

advisers, will invest in enterprise and wireless software start-ups, a market

that according to the fund appears to be weathering the economic slowdown in the

US better than most.

"Enterprise investments have mainly stopped in the US, while Europe

continues to catch up, mainly in Germany and France," said Managing

Director Roel Pieper, a Dutch-born citizen and former CEO of Tandem, who sold

the company to Compaq, where he briefly sat on the board.

"There are opportunities here to invest at attractive price levels in

companies that have their first products out and in some cases already have

customers," he added. Valuations have dropped by over 80 per cent, which

allows funds to buy five times more for the same money than a year ago when the

tech market was coming off its highs, Pieper said.

But investors should not expect an immediate upturn. "You have to assume

that we will remain at the bottom of the U-curve for some more months. But I

don't see us sliding down further, which is why this is the time to whet the

blades," he said.

Pieper said he would look at start-ups developing software and technology

that will help enterprises and public sector organizations such as hospitals to

coordinate their operations. "It's a bit more down-to-earth (compared with

the Internet craze). This time we're looking at enterprise software which has

been around for twenty years," he said.

Investors should not expect the quick returns of the heydays of the Internet

boom, when some companies floated within 12 months of inception. Exits, either

through IPO or sale would now take three years, Pieper said.

Pieper part-ran an earlier fund, Insight Capital Partners Europe 1, which

raised $270 million at the peak of the market last year, but which invested only

$65 million as the markets started falling. The remainder was handed back to

investors. But after the market's cold shower, US fund managers Jeff Horing and

Jerry Murdock will concentrate on US operations, while Pieper focuses on Europe.

(C) Reuters Limited 2001.