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Benchmark expands efforts overseas

One of the Web's most prominent venture capital firms announces that it has created a $500 million fund to help build Internet businesses in Western Europe.

Benchmark Capital, one of the Web's most prominent venture capital firms, announced today that it has created a $500 million fund to help build Internet businesses in Western Europe.

As earlier reported, Benchmark will pursue an investment strategy similar to the one it employs in the United States. One of its prime interests will be backing companies that produce wireless Internet products and applications, the company said. The company has backed such Net powerhouses as eBay and software maker Ariba.

Benchmark's foray into Europe comes a week after Net investment firm CMGI became a partner in a $1.5 billion venture capital fund dedicated to investing in international Web companies. U.S. Internet investors are eyeing international markets and banking on widespread adoption of the Internet overseas.

Europe, Hong Kong, Singapore and Australia are among the areas on the verge of major growth, said Vernon Keenan, an analyst with research firm Keenan Vision.

"Europe is beginning to wake up," Keenan said. "It was asleep at the switch at the wheel in 1999, but 2000 appears to be a year of change."

The number of European Net users doubled in 1998 to 15 million, according to Net research firm Dataquest.

But whether U.S. firms can be successful at tapping into foreign markets remains to be seen. Despite international efforts by eBay, Amazon, Palm and America Online, studies have shown that Europeans prefer homegrown companies and products.

Venture capitalists working overseas also must cope with the varying labor laws, fractured geographical business centers and a plethora of cultural differences. For instance, the French work only 35 hours a week; and in Germany, employees are required by law to give their bosses a three-month notice before quitting, Keenan said.

Benchmark, founded in 1995, said the investment fund will be devoted exclusively to European entrepreneurs.

In its operations, based in London, Benchmark said it will duplicate the same operational methods that it uses in the United States. The company steers upstarts by helping with executive recruiting and drawing up corporate strategies.

Despite Benchmark's early success with Net start-ups, several of its investments have struggled as of late. In recent months, the share prices of online grocer Webvan and luxury goods merchant Ashford.com have both hovered below their offering prices.

Benchmark invests in companies specializing in application services, consumer devices, e-commerce, infrastructure services, networking equipment, semiconductors and software.