paidContent - Interview: Index Ventures' Danny Rimer On New Skype Investment

This story was written by Staci D. Kramer.
It only looks like deja vu all over again for Index Ventures, the early backer of Skype that is now part of the investor group buying 65 percent of the company from eBay (NSDQ: EBAY) for $1.9 billion in cash. This time Index Ventures is investing in a profitable company—not trying to help a startup get off the ground, Danny Rimer told paidContent by phone from Tallinn, Estonia, the birthplace of Skype. The first time, Skype was a venture investment for Index that paid off in dramatic form; this investment—Rimer won’t say how much now, only that it is “very significant”—is from the 400 million ($568 million) Index Ventures Growth I Fund. Index will have two seats on the board; Rimer and former Joost CEO Mike Volpi, now with Index and a Skype board member when he was with Cisco (NSDQ: CSCO), would seem to be the likely reps but Rimer won’t confirm. Some excerpts from our chat:

Will Josh Silverman stay on as CEO? Rimer isn’t saying anything explicitly but he’s a Silverman fan. “Josh and his team have just performed superbly well over the past two years. We just want more of it. We think Skype has a huge amount of potential.” Rimer gave a similar response when I asked about retaining the executive team.

What can Skype do on its own that it couldn’t do with eBay?  Rimer quoted mentor Jim Barksdale: “The main thing is to keep the main thing the main thing.” Instead of being viewed as a distraction for eBay, Skype can focus on its mission of providing communication services through the internet. “We’re looking to help Skype take advantage of being an independent company. ... Even eBay would agree that they saw very limited synergies between eBay and Skype.” He says eBay’s decision to keep a 35 percent stake shows the parent company “views the potential as incredibly large.”

Does the sale price—and the $2.75 billion valuation—validate the original sale (for $2.6 billion in 2005)? “It definitely shows the value of Skype and what it is as a business.” (Index Ventures took part in Skype’s second round of $18.8 million.)

Once this deal closes, is he ready for the IPO pressure? “The reality is its not a pressure. The point of us investing and the syndicate that’s put together, is that everyone’s in line to make Skype as successful as possible without the underlying pressure of an IPO.”

By Staci D. Kramer