DFJ Esprit and Tempo Capital, two European venture capital firms, are to merge their respective venture secondaries businesses to create the largest venture secondaries firm in Europe, according to a spokesperson for the firm, called DFJ Esprit Secondaries.
“The primary and direct secondary investment markets are converging, with the result that scale and breadth of experience will become increasingly important in the direct secondaries market,” David Tate, managing partner of DFJ Esprit Secondaries, said.
There has been significant interest in secondaries and venture in the US, driven by Facebook’s forthcoming initial public offering, and DFJ Esprit and Tempo want to capitalise on that trend spreading to Europe as firms seek to invest in businesses at a pre-IPO stage.
In July, DFJ Esprit helped allay fears that European venture capital faced a difficult exit environment by making a 15x return on the sale of UK software developer Zeus Technology to trade buyer Riverbed for $110 million.
The combined DFJ/Tempo group will have more than $1 billion under management in European venture, and around 60 businesses in its portfolio, according to the spokesperson.
The group will invest growth capital in fast growing technology companies and provide secondary capital for selling founders and shareholders. It will be managed by David Tate and Olav Ostin, both managing partners at Tempo Capital.
The first joint portfolio acquisition was signed in January and is expected to close in the next few months, according to the statement.
DFJ Esprit, the European arm of Silicon Valley firm Draper Fisher Jurvetson, which has $7 billion under management, has concluded some of the largest venture secondary transactions in history, according to the firm.
These include the acquisition of Cazenove’s £234 million (€281m; $367m) venture capital fund, and the £170 million acquisition of the venture portfolio of 3i.
Tempo has also acquired venture capital portfolios comprising more than 60 companies from sellers including Siemens, WestLB, Viventures and BNP Paribas, said the statement. In recent years, Tempo has been backed by HarbourVest Partners, Greenpark Capital and other institutional investors active in the secondary market.
DFJ Esprit Secondaries will invest from its newest fund, DFJ Esprit III, and work closely with DFJ Esprit’s primary venture team, the firm said.