Karma Ventures has announced the launch of a €40 million, Luxembourg-domiciled fund offering early-stage investment in the most promising start-ups in Europe.
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The fund will be managed by seasoned investors Margus Uudam, Tommi Uhari and Kristjan Laanemaa. Uudam and Laanemaa previously worked together managing Ambient Sound Investments’ global portfolio
Ambient Sound Investments was created to manage the minority stake in Skype held by its four founding engineers, and subsequently to invest the proceeds of its sale.
It is a cornerstone investor in Karma Ventures’ fund, and two of those founding engineers of Skype, Ahti Heinla and Jaan Tallinn, are exclusive advisors to the new pot of investment money.
Skype was acquired at valuations in the billions of dollars three times; first by eBay, then a majority stake was purchased by an investment group headed by Silver Lake, and finally by Microsoft for $8.5 billion in 2011.
European Series A investments made by Ambient Sound Investments included the London-based startup Mendeley, which developed a collaboration platform for scientists and was acquired by Elsevier in 2013.
Also the health and beauty marketplace Wahanda, now known as Treatwell, in 2015. Both were acquired at significant multiples. Other Ambient Sound Investments portfolio companies which achieved successful exits include Modesat, Armorize and Versita.
“We’re seeing more excitement in Europe as more startups reach high valuations and manufacture successful exits,” said Uudam.
“More people are deciding to found or build start-ups, either instead of moving into traditional business, or after experiencing success and seeking a new challenge. That creates plenty of opportunity for early stage investment, but also means that the options both for startups and investors have multiplied.
Uhari added: “In the early stage, the kinds of companies we are interested in – companies with strong ideas delivered with unique technology, which are gaining traction with customers – need not just capital but smart capital, connected to deep knowledge and extensive international networks,”
The key investors in the new Karma Ventures fund are Ambient Sound Investments and the Baltic Innovation Fund, an initiative created by cooperation between the Republic of Estonia, the Republic of Latvia, the Republic of Lithuania and the European Investment Fund (EIF).
A number of pension funds and family offices have also joined the fund. The fund is targeting its second funding close by the end of 2016.