One of the UK's biggest tech venture capital investors Accel Partners now has $500m more to play with

 
Lynsey Barber
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Accel's London leadership team (L-R): Philippe Botteri, Fred Destin, Harry Nelis, Sonali De Rycker and Jonathan Biggs (Source: Accel)

The venture capital firm which was an early backer of Facebook, bet on start startup Slack, and most recently invested in Deliveroo and Funding Circle in the UK, has raised $500m (£351m) for a new fund to invest in startups across Europe and Israel.

“Entrepreneurship is flourishing everywhere across Europe and Israel; we’ve never seen so many great founders, both gritty and ambitious, come out of the region, and are excited to help them build the next generation of truly great, enduring businesses,” said Accel Partners London partner Harry Neils.

“We are grateful to be backed by many of the world’s best institutions, including premier endowments, pension funds and research institutes, and will continue to work hard to generate superior returns so that they too may be successful in serving their communities.”

The last time Accel raised was in 2013 with a $475m fund. Now, with the Accel London V fund, the VC firm's total funds under management in Europe and Israel stands at $2.5bn.

"We tend to invest around $15m over the life time of the company. And we've learned over the years, that in order to have a successful diversification on an investment portfolio you need around 30 companies," Neils told City A.M..

Read more: Why investors shouldn't ignore the hype about fintech

"Even though there's more demand, we've chosen not to increase for our benefit. and that of our investors. We feel it's the best size," he added, saying the company invests on average for seven or eight years. "We're long term investors. Nothing dramatic has changed, between now and the prior fund. All the good stuff happening then is happening now, but in greater amounts."

Fintech focus

It will remain focused on the UK, Germany, France the Nordics and Israel and consumer investments and enterprise software, but alternative finance is one of "the big ones" when it comes to investment opportunities, Neil told City A.M.

"And and that one is interesting for London because it has the highest concentration in the world of talent to make that work. We believe the financial services industry is ripe for disruption. And marketplaces, whether that's financial services marketplaces or ride sharing."

Accel has already invested in its first artificial intelligence company, Lola Travel, a mobile travel agency founded by two former executive of travel website Kayak. When it comes to virtual reality, another hot tech trend this year, Neil said Accel is still looking for the "right one".

Octopus raises £100m fund

Separately, London's Octopus Ventures which has backed Zoopla, Secret Escapes and Swiftkey - the keyboard app startup bought by Microsoft earlier this year - has raised £100m for investments across Europe, bringing its total early stage funds to over £400m.

Read more: Britain's financial regulator is the first to launch a fintech accelerator

"We have been fortunate to back some outstanding entrepreneurs over the years, many of whom come back to us time and again with new ventures, or who go on to introduce us to other exciting companies," said Octopus Ventures head, Alex Macpherson.

“Adding a further £100 million to our early stage funds indicates the opportunity and belief we have in the developing European entrepreneurial ecosystem, and provides Octopus with the funds to continue to support these exceptional entrepreneurs."

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