Europe's Crop of 'Billion-Dollar Babies'

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The companies it's targeting likely would have been sold for less than a half-billion dollars in the past; now, Zocco says, Index will give them a rocket boost "and go for the multibillion-dollar opportunity."

The Necessary Nurturing

Other global venture funds such as Accel Partners plan to play a role. With offices in Silicon Valley, China, and London, the firm has placed investments for years in Europe and Israel. "It is about being patient and building bigger companies," says Bruce Golden, a London-based partner. "We believe a number of companies originating out of Europe with the right backing and nurturing should be able to get to those kinds of sizes."

Accel is pinning its hopes on Qliktech, which had sales last year of $80 million. Golden calls it "the hottest software company to come out of Europe since SAP and Business Objects." Qliktech has hired Morgan Stanley (MS) as its investment banker in preparation for an initial public offering, says Chairman Mans Hultman. Industry sources say they expect the valuation to be at least $1 billion.

Another potential billion-plus initial public offering in the pipeline is Spanish alternative energy company Eolia Renovables de Inversiones. A kind of green energy portfolio play (see BusinessWeek.com, 2/5/08), Eolia has gobbled up more than 20 small wind and solar companies around Spain and is on an acquisition spree in Europe, the U.S., Mexico, and Latin America. It could go public this year on the Madrid exchange if market conditions improve.

Of course, that's the wrinkle. Even as Europe is now producing more robust tech startups, none can escape the chill sweeping equity markets worldwide. "We can't time market conditions," concedes Accel's Golden.

But some investors remain upbeat. Philippe Pouletty, a co-founder of Paris-based venture fund Truffle Capital, says by midsummer "there will be a strong rally and plenty of initial public offerings." And likely more billion-dollar babies.

For a slide show of 10 European success stories from recent years, see our slide show.

Schenker is a BusinessWeek correspondent in Paris.