US venture investors are not coming to Europe, they are already here, in VERY large numbers. They’re such a big factor in the European funding scene that the whole concept of “US VCs” and ”European VCs” is a thing of the past.
Since mid-2013, US investors have closed 150 deals a year into European growth companies, according to a recent Magister analysis.
Even more interestingly, US VCs have invested in 100 $20m+ rounds in Europe. There is so much traffic now across the Atlantic that we think $20m+ European fund-raisings must include talking to US investors. In the financing work we are doing, US investors are ALWAYS in the frame.
Why the invasion? We think there are several reasons.
First, there is a local funding gap in Europe. There are many more eligible European growth companies, driven increasingly by second-time entrepreneurs, than there are VCs in Europe with the fund sizes to support them. Nature abhors a vacuum.
Second, European growth companies have become far more ”investable” for US VCs. European companies follow similar and familiar US models in many sectors (e.g. eCommerce, AdTech, FinTech etc.), and many European companies are ready to expand aggressively into the US, with the right support.
Third, European growth companies are no longer at a structural disadvantage to US competitors. Europe always had world-class IP, and today it costs a fraction of the time and money to build a commercial business around such IP vs. even 5 years ago. Scaling internationally used to be scary, expensive and hugely risky. Today the playing field is far more level.
Finally, many European companies are still a little cheaper than US players. In the Silicon Valley greenhouse, there are so many VCs chasing good deals that prices get bid up quickly. Relatively speaking US investors perceive a little bit of a bargain at the cost of a plane ride.
There has never been a better time for a European growth company to raise $20m+, and there has never been stronger interest from investors 5,000 miles away.
Posted by Victor Basta @MaExits