The London technology community was dealt a blow on Tuesday when it emerged that Atlas Venture was planning to move its European operations to Boston. All new European investments will be co-ordinated from there, and Fred Destin, the London-based partner who has backed companies like Seatwave and Dailymotion, will be moving across the Atlantic this summer.
Other London-based partners, Christopher Spray, Graham O’Keefe and Regina Hodits will remain in London but only to service existing investments. They will not be involved in bringing new companies in to the portfolio. Which means that, as exits eventually arrive for the likes of Seatwave, these portfolio managers will have less of a role, and Atlas is likely to be slimming down further.
“It is a transition role,” admitted Mr Destin. He said that venture capital companies were having to live with new realities.
“Even though things are at more of an even keel now than a year ago, the available pools of capital have clearly shrunk. The longer term trend is for fund sizes going down. We thought, let’s proactively take the team down a bit so we can be more nimble,” he said.
Atlas Venture is not too badly off. It was one of the very few venture capital groups to be able to raise a new fund - of $283m – at the end of 2008. At the end of 2009 it even had an exit, with Novexel, the French infection research company bought by AstraZeneca for $350m in cash.
But even so, Atlas feels the need to cut its cloth very differently in the post credit crunch world. Will the other venture capital firm have to take similar steps? The government’s plans for a UK Innovation Investment Fund - which has £325m so far and aims to raise £1bn in total - could go some way towards topping up funding for projects, but what the community desperately needs is some exits. If the IPO window doesn’t open this spring as hoped, Mr Destin may not be the only London venture capitalist getting on a plane.
