Davor Hebel, a partner for Fidelity Growth Partners' European wing, is bullish about the future of tech investment in the local market, believing that while it is still some way behind the US, the ingredients are right to foster a number of ‘clusters’ beyond London’s Silicon Roundabout. Here, he discusses current areas of interest, and passing up investments in Wonga and Spotify .

¤ What are your key investments?
We invest in software with part of the focus on more innovative areas, such as software-as-a-service and the cloud. We invest in internet, so that includes marketplaces and e-commerce, and digital media, so online games and other transformational areas like video and music.

We've made investments in all of those areas - so we have an investment in the Nordics called Neo Technologies. We also have an investment in Good Data, which is originally a Czech company, now with significant presence in the Valley. In Germany we have InnoGames, which is an online gaming publisher and developer. In the Netherlands we've invested in a financial data management company called Asset Control, and now the CEO sits in New York.

Ireland has been extremely successful for us. We've just had two big exits in Ireland: a mobile software developer called NewBay Software, and a government CRM software developer called Cúram Software.

¤ Which markets do you focus on?
One of the reasons why we've raised a separate fund for Europe was to really go further into certain geographies. So we focus on the Nordics, the UK and Ireland, Benelux, Germany, central Europe, and then some of the upcoming areas like Turkey.

Part of our remit now is really covering all of the European markets, because if you look at the returns in Europe, you won't see the same clustering that you see in the US. A lot of people talk about the Silicon Valley cluster as the area where everything happens. And here some of the potentially big companies are dispersed all over the place.

We don't believe that all of the returns are going to happen in the Silicon Roundabout, though we like its initiative. We feel like the great returns are going to be more dispersed.

¤ Which investments have really stood out for you?
That’s sort of like picking your favourite child! One interesting story is around the German games company InnoGames. They focus on free-to-play, browser-based games, so they develop and publish their own games. And it's a fascinating story - they dropped out of school - two brothers and a friend - and in 2003 they started writing games. First for their own amusement, and then for their friends' amusement, and all of a sudden their first game, Travel Wars, hit 1m active users, and then 2m active users, and then 3m active users, and at some point they said they could make a business out of this.

¤ Where do you wish you had invested?
There are a few companies like Wonga. [Founder Errol Damelin] is a friend, and I think there's tremendous potential. In some ways it's similar to our investment in SeatWave, where clearly ticketing is a grey-area market, but I do think SeatWave takes something that's pretty opaque, and tries to make it more transparent. There's only so much you can do as a standalone player in the industry, in an industry that is quite flawed. I feel the same way with Wonga. It was a little bit sensitive for us to invest in something that might be labelled as payday lending, but I do think that in the long term, Wonga will transform the market of financial services.

With Spotify, I looked at Series A. Music is a notoriously difficult market, and though I really liked [co-founders] Daniel Ek and Martin Lorentzen, it just felt expensive.

¤ Are we in a tech bubble?
If you look at the speed of growth of something like Groupon, if you see that Facebook was founded when I was in business school at Harvard and now it might be a USD100bn company, this is one of the things where people always say: 'Be careful'. But it does feel from the internet perspective that this time it's different. Internet penetration and technology adoption have gone forward so much. There are so many internet users, globally.

When the first giants were created, in the 1999 timeframe, it was just the US and maybe a bit of the European market. Today, most internet usage is outside the US and the UK. So these companies have a much bigger addressable market, so there will be a lot of giants created. The question is, how many? That’s probably where the opinions diverge. Our opinion is that if you can start to see the metrics of a business work, often pouring money on it really does help you scale rapidly. If you look at Pinterest, the growth is phenomenal.

We try to be conservative in our estimates in terms of how the company's going to be able to perform, and try to see it being able to make money.

¤ How can Europe compete with Silicon Valley?
I do believe in the cluster theory - that there is a positive feedback loop between great entrepreneurs, great talent, great investors, and the whole ecosystem almost self-perpetuating itself. We'll see more and more of London, with its Tech City. Berlin is already happening, but I don't necessarily think you can orchestrate it top-down. You have to let it grow grassroots.

What we can do is foster it, to create an environment for people to feel encouraged going into entrepreneurship. We need to reinforce that type of risk-taking. We need to celebrate our winners. We need to educate people about some of the new areas and build functional expertise. And when you have a couple of great role models –like if Errol makes it big with Wonga - then more people want to do it.

¤ But is funding tough to obtain unless you are in London?
I do think the European ecosystem is behind the US ecosystem. Fidelity started first investing in the US in 1969 - whereas probably the first European funds didn't happen till maybe the 1990s on a larger scale. And even today we're still probably a fifth of the size of the US industry. So there's just less venture money. Historically, a lot of venture firms say: 'If I can't get there in an hour, then it's not really a manageable investment'. We do not subscribe to that mantra, and that's why we set up a pan-European fund. That's why we get on planes and we go see people. If you look at some of our companies, InnoGames was founded in the suburbs of Hamburg in Germany, Asset Control was founded two hours outside of Amsterdam in the Netherlands.

But is it easier if you're in the Silicon Roundabout, and the VCs are having coffee every second or third week in your neighbourhood? Probably.