Skype hunt: How VCs struck gold in Europe

Here’s the piece (free registration) that ran today in the Merc, which recounts the story behind Skype’s investors.

It is a story about a scrappy scoop scored by a relative novice at venture capital, Howard Hartenbaum. He is pictured here at left. He was the first to invest money into Skype, and so will have the best return, now that eBay has bought the company for up to $4.1 billion.

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The story also may reflect the danger of Silicon Valley-centric firms becoming too complacent, even while business goes global. None of the purely Silicon Valley-focused firms was in on this blockbuster deal, where some of the early investors appear to have scored close to a 1000-fold return.

By the way, there is some really intriguing extra reading here…

in this Fortune piece, mentioning the wild goose chase that took place across the U.S. and Europe, as record industry execs chased down the two Scandinavian Skype founders to serve them a subpoena based on their past activities at file-sharing company Kazaa. Our favorite was of the part when one of the founders, Niklas Zennstrom, reports of taking a morning walk in a London garden with his wife, and having to take off running to avoid getting mobbed by men, one riding a motorbike and sporting a black-and-white leather suit.

And our colleague, Dawn Chmielewski, also has a piece in the Mercury News (free registration), arguing that this past still haunts the Skype founders today.

We should mention that none of the Skype investors we talked with wanted to talk about this aspect of the Skype deal — quite understandable. Of course, it is no surprise that eBay’s Meg Whitman and Hartenbaum went over to Europe to celebrate the deal announcement — instead of making the founders risk treading shaky legal ground over here.

Unfortunately, Hartenbaum was too busy to talk with us before our story closed. He did email us last night, though, jet-lagged, saying there was an inaccuracy on the amount we reported about the seed round. He declined to elaborate, despite our multiple requests that he do so. Our on-the-record source for the figure was Bill Draper (pictured at left). Perhaps we misunderstood him? We’ll report more, if we ever find out. Here’s his bio (scroll down).

Finally, here’s the kicker of our story, from Danny Rimer, of Index Ventures in London, which sums up its theme:

“In Silicon Valley, all the entrepreneurs go from door to door on Sand Hill Road,” he said. “In Europe, you have to uncover every individual rock. There’s no hub, and entrepreneurs aren’t going to go out of their way to find you. We’ve got to do a lot more work.” How did Rimer find Skype? “We sent them an e-mail. . . . That’s how it all started.”

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