You have been living outside Europe for the past couple of years. What has changed?
Fred Destin: I think we are past our inferiority complex. People don’t sell early and investors are OK to ride their winners and take the time to get real value. European start-ups are overcoming the problem of geography: better tools and management techniques allow start-ups to go multi-country quickly. In the past every country had its own infrastructure. Companies like Booking.com and King have helped create a different playbook for international roll-out. You can run all marketing out of a place like London with teams of nationals and smaller, nimbler teams on the ground locally.
A recent report said Europe has produced 30 tech companies worth over $1 billion between January 2000 and April 2014. What does Europe need to do to create more?
We need to continue to woo the big acquirers and establish meaningful local centers. Google now has a big presence in London. We should push Amazon to have a bigger presence in Europe and make sure other corporate acquirers are close to our companies and more embedded into our local ecosystems. We are still struggling with the regulatory environments. The cost of complexity is that it is making it really hard for us to scale as fast as we could.
Born in Brussels, Belgium.
Degrees in finance and engineering from the University of Brussels.
Studies at Hong Kong University of Science and Technology.
February 2000-March 2001
Investment manager at Speed Ventures in London.
Joins Atlas Venture in London.
Invests in French start-ups Price Minister and Daily Motion.
Makes seed investment in the UK’s Zoopla.
Invests in and joins the board of new incubator Seedcamp.
Moves to Cambridge, Massachusetts for Atlas Venture.
First U.S. investment in adtech company Integral Ad Science.
Invests in Secret Escapes, Currency Cloud, Pillpack, among others.
Moves back to London to join Accel as a Partner after ten years with Atlas Venture.
Why are most of the biggest tech companies still coming from the Valley?
I don’t think anywhere on the planet can compare to the vortex of the Bay area. Europe hasn’t been able to build large tech companies. (Nokia was a flash in the pan and ARM isn’t that big). Look at telecoms. European governments killed the companies with licensing fees. From the VC point of view Europe was late to the bubble. VCs like Atlas started in the ‘80s; it took to 1995-1998 to get any scale. Then came the Internet bubble and we got our knees cut off. European venture is still in shrink mode but the good news is Mosaic and other new funds are being formed and new managers emerging. As for start-ups, Skype was the first exit that people outside of Europe took note of. Spotify and TransferWise are second generation. These guys are building bigger stuff so it is coming.
You wrote that sky-high valuations for companies like Instagram are justified and do not signify a bubble. Please explain.
The companies that achieve breakout in a cloud-enabled mobile environment with hyper growth can go from $100 million to $1 billion to $5 billion in a very compressed amount of time. Those that say these companies are overvalued are lacking in imagination. The world is extremely fluid because of this nonlinear acceleration but it is not a sign that we are in a bubble. That said, there is price inflation on early rounds that indicates that everybody thinks they can scale at the speed of Uber. There is a fear of missing out on the part of investors and a sense of irrational exuberance on the part of entrepreneurs, which is causing the market to overheat.