Benchmark Capital raises $550m for European fund

Benchmark Capital Europe has raised $550 million for its third fund without having sold a portfolio company from its previous fund.

Benchmark Capital Europe, a venture capital firm, has raised $550 million (€430 million) for its new European venture capital fund.  This is Benchmark’s third European fund, having raised $500 million in May 2000 and $375 million in July 2004.

Moneyspinner: Betfair generated a 40 times return for Benchmark

Investors have backed Benchmark despite not making any exits from its previous fund.

A spokeswoman for Benchmark told PrivateEquityOnline: “The fund’s only a year or two old.  We have three funds and it’s not the right time to make exits.  It’s not a private equity company so we don’t need to constantly spin out businesses.  We’re in the business of developing companies and getting them off the ground.”

Barry Maloney, general partner at Benchmark, said: “Our funds typically have a five to six year lifetime so three and a half years, for which we’ve held the fund so far, is very early to start liquidating assets.  Also, venture capital has very strict guidelines on returning.”

Maloney added: “We raised our third fund to invest because the last thing you want in venture capital is to run out of funds.  Our issue is finding more partners.”

In the past year Benchmark has invested in US social networking site Bebo and sports broadcaster Setanta, which won football broadcasting rights to the FA Premier League, the UK’s top-flight football league.

In February Benchmark sold a stake in Betfair, a UK person-to-person betting site from Benchmark’s first fund, to Japanese technology group Softbank, generating a 40 times return.

Benchmark Capital was founded in the US in 1995.  The European office opened in London in 2000 and the Israeli office in 2001.  The company has three funds totaling $1.425 billion and has made more than fifty investments.

Yesterday, EAC, a UK mid-market private equity firm, said it was winding down its investment business and letting go three partners including co-founder Robert Mason, because its short-term fundraising prospects were poor without any exits to show from its current fund.