Stefan Glaenzer is looking for his third hit, although the German angel investor, now based in London, cannot complain so far. He made several million selling his share in Ricardo, the internet auctioneer, to QXL in the first dot-com boom and later used some of that cash to invest “a few hundred thousand” in 2004 into the internet radio service Last.fm, which turned into £22 million on its £140 million sale to CBS this month.

London may not be Silicon Valley, but there is at least enough internet money around to help to create a small cadre of angel investors – who are often crucial to getting a start-up going before the money men get involved. “You can get venture capital investment too early,” Mr Glaenzer says.

Mr Glaenzer found Last.fm via a German blogging site that he had created and, with a love of music – “I’d been a DJ at university in Hamburg” – he signed up, and soon after sent the founders, a London-based German, Austrian and Brit, an e-mail. “They didn’t need any help developing the product, but what I liked was their passion, and I was able to convince them that I could help with 15 years of having been around before,” he says.

Having German roots helped him to win confidence, and Mr Glaenzer became chairman of Last.fm in 2004, aged 43, basing himself in the office to keep the twentysomething founders Felix Miller, Martin Stiksel and Richard Jones focused. They were “quite inexperienced when it came to business”, managing the money, and gradually bringing Last.fm into the arms of Index Ventures, which put cash into Skype in 2006.

What, then is a German doing in London looking for internet investment? He “went on the boat to England the day we sold Ricardo” with a desire for a lifestyle change. The advantage of London, at least in business terms, is not some blather about the regulatory environment, but more simply that “it makes you think global – if you start an internet business in Germany, you target the 100 million German speaking market, which is fine, but still not big enough”. Moreover, Mr Glaenzer says, you cannot draw on global talent. “You don’t get many Koreans, for example, in Hamburg.”

Britons, though, may not agree with this German judgment, given the disappointing international record of British dot-coms (think Egg or Last-minute or QXL), but Mr Glaenzer’s hope is to build “a succesful European internet company”. Unfortunately, selling out to CBS – the American television, radio and film group – did not exactly achieve that.

Mr Glaenzer concedes though, that the decision to sell out was not his own – a reminder perhaps that angel investors, however engaged, ultimately have to take a back seat when the crucial decisions are taken. There was “an approach about once a month for the last 12 months” as Last.fm began to generate a buzz in the press, and the number of registered users climbed to 20 million.

“All of them were US companies; it reflects the fact that Europe is two and a half years behind the US,” Mr Glaenzer says, although he is coy on names, other than confirming that there were some half-baked discussions with CBS’s sister company, Viacom, which never got anywhere despite rumours of a $450 million bid.

Mr Glaenzer wanted to raise another £10 million and carry on, but was outvoted. “CBS just wanted to carry on doing what they were doing, and they came up with a great price,” he says. “I’m not saying News Corporation [parent company of The Times] approached us, but if they did, they would want to make us a part of MySpace – CBS didn’t have a big digital business.” With CBS in charge, it is time for the money man to get out because the broadcaster can provide the commercial expertise now.

So what next? “We shouldn’t end search engines with music,” the adoptive Londoner says, as he seeks other social applications, although he will not say which websites he is eyeing up. As private equity runs into controversy, and heads for bigger deals, angels such as Mr Glaenzer are emerging to fill the gap.

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