News & Analysis

DFJ Esprit secures 5x exit from sale to AOL

DFJ's European venture affilate has secured a 150 percent IRR over 18 months from its sale of e-commerce website buy.at. It was also joined this week by Amazon as a backer of DVD rental company Lovefilm, marking the increased maturity of the European venture market.

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Internet company AOL has bought e-commerce company buy.at from European venture firm DFJ Esprit, according to the venture firm’s chief executive Simon Cook.

Terms were undisclosed, but Cook said the deal had produced a five times multiple with a 150 percent internal rate of return. DLJ Esprit invested in the company eighteen months ago with a £15 million ($29.4 million; €20.1 million) growth investment.

The rapid growth of the company was driven by its expansion into the US, Cook said.

Cook said the internet share of ad spending is 14 percent of the overall market in the UK compared to 13 percent in the US. “The UK is a hotbed of innovation for online marketing – most people would be surprised that a higher percentage of the advertising market is online in the UK than America,” he said.

DFJ Esprit was one of four venture firms that backed DVD rental business Lovefilm, and these companies have been joined by internet giant Amazon, which has taken the largest stake in the company valuing it at around £200 million. Cook said the decision not to exit demonstrated the increasing maturity of European venture.

“Instead of taking an early exit European venture capitalists have hung on for the long haul. Those like us that have survived [the dotcom bubble fallout] are in for the long term and nobody wants to sell too early.”