by Adriana Hamacher

OP/ED - Last week, Seatwave backer, Atlas Ventures announced its relocation to the US, saying there are “too many average funds in Europe”. The decision no longer to invest from London has caused concern within Britain's technology community. Defending the decision, Atlas Ventures partner, Fred Destin, a prominent player in the venture capital (VC) industry, explains:

"There's definitely a crisis within the VC industry that's been brewing for some time. There's a lot of money locked into VC funds that is not being returned. Right now this industry has too much capital. It needs to shrink and needs better practitioners."

 Atlas has made a name investing in young companies with high growth potential looking for their first or second round of external finance. Success stories have included Seatwave, property portal, Zoopla, and mobile broadband hardware firm Icera. The company was set up in Amsterdam in 1984, opened in Boston in 1986, and arrived in London in 1997.

The move to the US does not mean the company has turned its back on Europe, says Destin:

"We did not make the decision because we thought Europe was not attractive.We will definitely continue to invest in Europe. What we will do is leverage the networks we have. We will coinvest with people we really like. What I probably will not do as I did in Zoopla and Seatwave is be the sole investor for a year before bringing in someone else."

Mr Destin said UK Government attempts to replace lost private capital with public funds risked doing little more than lining the pockets of a few lucky venture capitalists. Three Whitehall departments have pledged £150m to a £325m UK Innovation Investment Fund that will begin investing this year. One, Hermes Private Equity, will set out its plans today.

For the full interview, click here.