IDG Ventures Europe establishes Israeli Link

10 December 2001

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IDG Ventures Europe (IDGVE), a $100m London-based venture capital fund management company, has announced the beginning of its operations in Israel through an informal alliance with the Koteret Group. IDGVE was established by International Data Group (IDG), a privately-held international IT media, research and exposition company. IDG also owns IDC, a research and consultancy arm.

According to official sources, Nisso Cohen, chairman of the Koteret Group and country manager for IDC Israel, will serve as a referral agent for IDGVE for Israeli companies and venture capital funds. As Nisso Cohen is IDCâ€™s main representative in the Middle East, and he is therefore both well-known to the partners at IDGVE and has established a strong local network, IDGVE have selected the Koteret Group as a suitable partner. The main benefit to IDGVE of the informal agreement will be improved dealflow. In return, Ajay Chowdhury, managing partner at IDGVE, reports that IDGVE will be able to provide further funding to, and act as a bridge for, Israeli technology companies that want to expand into the European markets. IDGVE has set up this alliance, rather than use some other method such as an acquisition or organic growth, as part of a broader strategy to build on IDGVEâ€™s and IDGâ€™s existing European network. Accordingly, this move has been described as â€˜very much growth orientedâ€™. The agreement between the two parties has not been formalised in writing and it has no set life-span, although it will be reviewed in approximately one year and, according to Chowdhury, â€˜as long as it is working for both parties I see no reason not to continueâ€™.

When selecting a partner, IDGVE will look for a firm that is strong in its sector, possesses good networks, understands both the technology and the venture capital businesses and has a measurable track record. Chowdhury remarks: â€™we would be loath to link with an unknown firm unless the staff there were personally known to one of our partnersâ€™. In relation to alliances generally, Chowdhury comments that: â€˜I think such moves are part of a general trend in this sector. VCs are working together more and more in the current climate and people want to participate in syndicates to reduce risk. This is very different to last year, when people invested in â€˜hotâ€™ companies and did not want to involve anyone else. I think that more co-operation in the industry can only be regarded as a welcome developmentâ€™.