Holtzbrinck investment fund eyes small web plays

Thu Jan 13, 2011 6:40am EST
* Holtzbrinck launches 177 mln euro investment fund
* Fund will provide capital to internet start-ups
* U.S. venture capital firm HarbourVest is partner
FRANKFURT, Jan 13 (Reuters) - While small Internet start-up
companies have little chance of gaining investment in an age of
global players, one investment fund aims to give them a boost.

Holtzbrinck has closed its fourth fund -- and first in
partnership with fellow venture capital firm HarbourVest -- at
177 million euros ($231 million). It will provide capital to
companies in its portfolio and to other media companies.

Martin Weber is a partner of Holtzbrinck Ventures
Investment, the venture capital arm of the Georg von Holtzbrinck
Publishing Group, which has been investing in small Internet
start-ups based in German-speaking Europe since 1998.
"We invest in small Internet start-ups, mostly consumer sites,
because it is financially attractive to do so, but also
because it is fun," he told Reuters on Wednesday.

"These are young, creative companies and it's fun to be a
part of their innovations and create growth."
He said the Internet was the most capital-efficient medium
because it was possible to set up companies with little capital.
The venture capital firm's 80 investments since 1998 include
some of the most successful German internet companies, such as
social networking website and Facebook peer StudiVZ, and fashion
retail site Brands4Friends, which was sold to eBay (EBAY.O) for
150 million euros in December.

Other main holdings include web advertising firm Groupon,
which offers leisure deals and merged with Citydeal in May 2010.
"We decided to invest in Citydeal because we thought the
concept would go down well in other countries," Weber said.
Holtzbrinck also provides capital to dating sites such as
Germany's eDarling, which it chose for its "innovative approach"
to online match-making.

Asked about the success of dating sites in its portfolio,
Weber said: "We need to think in terms of the overall portfolio.
Revenue that high-performing companies bring in must suffice to
cover losses made by other companies in our portfolio."
Asked why Holtzbrinck had entered a fund partnership with
HarbourVest, Weber said: "We wanted to create a wider basis,
which is why we got a partner involved.
Source: Reuters.Com