The changing European VC landscape

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We often talk about how much the European tech landscape has evolved in the last 5 years, but something that is apparent is that the European VC landscape is changing too. The liquidity of exits is accelerating, driving the appetite of LPs to back VCs in the region, but also providing the ability for successful entrepreneurs and members of older firms to create new funds.

In 2013, Atomico, the VC fund founded by Niklas Zennstrom of Skype, had raised $476M and moved towards later stage investments. Klaus Hommels, arguably one of the most successful angel investors in Europe had launched Lakestar. Accel had announced its $475M new fund for Europe and Israel. Earlybird had announced a new European fund and a new $130M fund targeting Turkey and Eastern Europe.

And then things accelerated in the last year:

  • April 2014: Balderton (formerly Benchmark Europe) announced $305M for its fifth European fund. More interestingly, the firm moved from Mayfair to its hip new office space near King’s Cross a signal of the shift of power toward the entrepreneurial ecosystem in the East and away from Mayfair.
  • June 2014: Index (whom along with Accel can claim the crown for the leading VC firms in Europe) after betting on the region starting in 1996, announced a new $550M early stage fund.
  • July 2014: Google Ventures finally came to Europe with a $130 million *a year* fund and a fantastic team of angels and entrepreneurs. Assuming a 4 year investment period GV is a $500M fund dedicated to Europe. Here are some thoughts from last year on the potential impact of GV on the Euro scene.
  • September 2014: Toby, Mike and Simon unveil Mosaic Ventures, a new $140M fund squarely focused at the Series A opportunity in Europe. The guys, apart from being longtime friends, had independently invested in the likes of Criteo, King and Alibaba and created $200B worth of enterprise value.
  • September 2014: DN Capital, the early backer of Shazam raises its third fund for $200M, 3 times the size of its previous funds. Nenad and team have continued to bet on Europe and specifically increased their focus on Berlin.
  • December 2014: Nordic fund Northzone, best known for being the early backer of Spotify announced a $325M fund, it’s seventh and largest to date.

Heck, lets just focus on the last week:

  • May 28, 2015: Passion Capital, arguably one of the earliest and most visible entrepreneur-fouded, US-style “micro-VCs” announced their second fund of $69M after investing in over 40 companies in the last 4 years.
  • June 1, 2015: Harry Brigs of Balderton, Rory Stirling of MMC and Simon Calver, former CEO of Lovefilm, announced a £200M fund targeting the UK, backed by the Business Growth Fund.
  • June 3, 2015: Frederic Court, formerly at Advent and the backer of Zong (sold to Ebay), Vitrue (sold to Oracle) and DailyMotion, unveiled Felix a new $120M fund focused on digital lifestyle and brands.
  • June 3,2015: The team at Point Nine Capital were one of the first funds out of Berlin and have reaped the benefit as that hub has taken off. They announced their third fund (second institutional fund) of $60M to continue betting on software businesses.

This non-comprehensive list alone signals over $2.25 billion of funding raised by European VCs since the beginning of 2014!

I purposely didn’t include our own White Star Capital in the list as this post is not meant to be about us, but we are certainly excited to a part of this new wave of funders in the European ecosystem and to have the opportunity to work with many of the people mentioned above as co-investors backing the new generation of ambitious European entrepreneurs.

There are a number of new funds currently being raised, and more interestingly a number of new funds of funds (the funds that invest in funds) specifically targeting European VC as an asset class. It’s a great signal of the vibrance we see around us in Europe. Opportunities are plentiful, even if capital is still scarce when compared to the US, Israel or China.

As Ciaran O’Leary of Earlybird said in a blog post last year “The best thing happening to European VC: increased competition.”

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Christian Hernandez is the co-founder and Managing Partner of White Star Capital, an early-stage Venture Capital fund backing exceptional entrepreneurs with global ambitions on both sides of the Atlantic. www.whitestarvc.com

Disclosure: I am personally a small LP in some of the funds named above and White Star is a co-investor with a number of the funds in portfolio companies.

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