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Benchmark Capital Europe Goes Its Own Way

Seven years after Benchmark Capital launched its European fund, Benchmark Capital Europe, partners on both sides of the Atlantic have decided to sever the nominal ties that bound them, allowing the European team to launch a new fund -- Balderton Capital.

With its launch, Balderton immediately becomes one of the largest independent venture firms in Europe. The re-branding from Benchmark Capital Europe to Balderton Capital does not affect the structure of the fund, nor does it impact the firm's relationship with any of its limited partners, according to partners at Benchmark and Balderton.

"We've always believed in an independent local autonomous model," said Benchmark Capital General Partner Kevin Harvey. "We've been operating independently for quite some time," he continued. "Europe has reached a state of success where it really deserved its own name going forward."

The timing of the launch of Balderton coincides with a number of imminent initial public offerings from its portfolio, including that of the Baoding, China-based photovoltaic manufacturing company Yingli Solar Inc. "From our perspective we have interesting exits coming down the pike," said Balderton Capital General Partner Barry Maloney. "[We said], 'Let's do those exits under Balderton Capital as opposed to a brand that we're not going to have any equity interest in, in the future.'" The deal also reflects a return to core principles for the U.S. team, Maloney said.

"The U.S. guys made the decision that they wanted to focus on early stage in the U.S. and started the discussion with us," he said. Over the past week, Balderton Capital general partners have traveled across the U.S. to explain their reasoning for re-branding to investors, Maloney said. The overall response has been positive, he said. Benchmark Capital has always billed itself as operating differently from the traditional venture model. General partners in the firm have equal shares of proceeds and the firm prides itself on the independence it affords to general partners.

Institutionally, the firm's geographical diversity and singular approach to investing were bound to come into conflict, Harvey said. "If you wanted to take our model and have it with a single name for 30 years, you would have some super-hierarchy of some type," he said. "Given that, we always envisioned independence and autonomy as the end-game." In fact, Harvey indicated that eventually the Israeli branch of Benchmark Capital will also strike out on its own. However, he said that would not happen soon, because of the relative youth of the Israeli firm.

The timing works in Balderton's favor. In late November, as Benchmark Capital Europe, the firm closed on its $550 million third fund. Investments in open source darling Uppsala, Sweden-based MySQL AB, and London-based Betfair, along with Yingli Solar, helped establish a track record for the company, while at the same time highlighting the difference between the two firms' approach. "In the U.S., we're very concentrated on early stage investing. In Europe, they found some early stage [deals] but have a lot of late stage opportunities," Harvey said.

Despite the new name, the two firms will remain close collaborators. "They have favored nation status," Maloney said. The general partners of Benchmark Capital have invested significantly as individuals in Balderton, Maloney explained, and Balderton's partners have reciprocated.