If you’re reading this is Europe, chances are you’re an English-speaking, highly-skilled employee at a multinational corporation. But there’s an increasingly likely chance you’re involved in some level with a startup … either as a founder or helping founders develop a concept.
All you need is seed money, right?
The sobering reality is, you’re up against Silicon Valley, my expat friends.
This is an amazing fact: In the past 40 years, exactly one of the 100 most successful global start-ups has come from Europe. Twenty-five percent came from California alone. Why? Well, at least in part, it’s lack of early stage capital. In Europe, 80 percent of financing for SMEs still comes from banks, with only 20 percent in the form of angel capital. In the U.S., the numbers are reversed. (In the U.S., senior secured debt – even Small Business Administration-guaranteed bank loans – requires collateral, and who’s going to risk their house on a startup? Puh-leez ….)
That’s changing quickly. Even foundational VCs in San Francisco are seeing huge opportunities in Europe. Accel, the Silicon Valley stalwart, announced a $500 million fund earlier this year to fund startups in Europe and Israel. The 33-year-old venture capital firm was first-in in Europe with an early investment in Paris-based Blablacar and Stockholm-based Spotify. Back in April, VentureBeat reported the value of Accel’s funds in Europe and Israel is about $2.5 billion.
The good news is, there’s more and more funding available for European startups from early stage investment firms in Europe, the U.S. and even Australia every day:
• File this under, “The rich just get richer.” Bloomberg is reporting Cherry Ventures, a Berlin-based venture capital firm, has raised a new fund worth about 150 million euros ($170 million) that it plans to direct at the city’s burgeoning startup scene. Cherry Fund II is managed by an alum of the Rocket Internet/Zalando group, the Berlin-based e-commerce matrix that’s going head-up with Amazon in Europe. Bloomberg quotes managing partner Filip Dames saying the fund is looking for technology startups seeking bigger seed investment rounds (up to 1.5 million euros) than Berlin’s angel investors typically provide.
• Last summer, Business Growth Fund — a 2.5 billion pound (2.8 billion euros) investment company that backs businesses across the United Kingdom — announced a 2 million pound fund for early stage startups. In the year that followed, the fund invested in nine startups includingLondon-based food delivery startup Gousto, doctor booking platform Network Locum, and subscription educational/craft company toucanBox, according to Business Insider UK. Unlike U.S. VCs, the capital behind BGF comes not from sovereign wealth funds, wealthy investors or institutional investors, but from banks. Britain’s five biggest banks: Barclays, Lloyds, Standard Chartered, RBS, and HSBC all chipped in.
• London-based Draper Esprit raised 69 million pounds ($98 million) in an initial public offering last month, according to Bloomberg. As Bloomberg reporter Leila Abboud points out, publicly traded investment firms need big scores real fast to keep shareholders happy. The fund’s investments include healthy snack delivery company Graze, and chipmaker Movidius. Graze is based in London, and Movidius (who does stuff with chips and algorithms we can’t even fathom) has offices in Silicon Valley, Dublin and Timisoara, Romania.
• Australia (the country) wants to get in on the startup revolution in Europe with a new Berlin “landing pad” project, according to ZDNet. Berlin is the next location for an $11 million (Australian dollar) startup landing pad initiative meant to help Australian entrepreneurs bring their ideas to market. Australian and German officials made the announcement earlier this summer, saying Berlin is a “leading source of global innovation and disruptive technology, as well as a low-cost business centre and the startup hub of Germany.” Umm, low cost? Maybe 10 years ago ….
• London-based e.ventures has raised $150 million (102 million pounds) to invest in early-stage technology startups specifically in Europe. And this is particularly good news … e.ventures will focus on Series A rounds from 1 million pounds to 5 million pounds. A-round investments are particularly difficult to come by in Europe compared to the U.S. e.ventures has raised $150 million (102 million pounds) to invest in early-stage technology startups, with some money from the European Union.
Founded in 1998, e.ventures has already invested more than $1 billion (680 million pounds) in 170 companies. Partner Luis Hanemann told Business Insider that e.ventures aims to be seen as a “more approachable” venture capital company.
• VentureBeat has reported that Partech Ventures has closed a $440 million fund aimed at later-stage startups. This is a truly global investment effort with hubs in Paris, Berlin and San Francisco. Partech has invested about $130 million in five European and U.S. startups, including U.K.-based social media intelligence company Brandwatch, and San Francisco-based ad network RockYou, according to VentureBeat. However, the Partech website lists about 80 startups in its portfolio representing SaaS, mobile and other digital high-tech sectors.
• Finstar Financial Group, based in Moscow, added three senior hires last month, according to a news release. They are:
- Eugene Timko: Timko will evaluate investment opportunities in the fintech and services sectors. Prior to joining Finstart, Timki was IBD associate at Morgan Stanley.
- Michele Tucci. Tucci will develop fintech mobile products and partnership. She is a former VP of the professional-services arm of MasterCard Worldwide.
- Alexander Ivanov. Ivanov is responsible for developing venture capital activities in fintech. He is co-founder of Life.SREDA, an international fintech venture capital fund.
About Finstar: Finstar invests in financial services, telecommunications, high tech, retail and real estate. It acquires majority stakes in rapidly growing companies with proven business models in promising segments and capable founding partners. The founding partners stay to run the business until it’s viable, holding the minority stake.
