Is Billion £ VC raise really that big in Europe?

TLDR: No. It’s less than even the quarterly VC investment rate in Europe.

There was a bit of chatter in the London startup investor community recently about the welcome increase in amount of funds being raised.

I remember Jon Bradford specifically mentioning close to a £1 Billion raised in a few months by 9 funds. There was a bit of a flutter around the group when JD mentioned the figure at #fplive – people wondering if all the money could even be deployed in the relatively nascent European / London tech startup ecosystem. Someone may even have mentioned valuation bubble, or some such gobbledygook.

Take a quick look at this chart from Dow Jones (source):

Click to view full image.

Last quarter VCs invested €2.4 B (~£1.8B) in European companies. At an investment run-rate of £1.8 B a quarter, and increasing, that £1 B raise in a quarter doesn’t look that big anymore.

There will be some additional liquidity from investment exits[1] – IPOs and acquisitions. But given the relatively young ecosystem in Europe – most maturing, successful European startups move(d) to the US for better valuation & operating environments – there can’t be too many exits providing the rest of liquidity.

Makes me wonder the other side now: If this £1 B raise is such a big deal, where has the VC funding been coming in from so far? We’ve been above a quarterly £1 B quarterly investing rate for over 6 quarters now. US VCs investing in Europe without direct presence?[2]

Either way, that £1 Billion figure doesn’t look as big as it sounded first up. And we really do need more of them, more frequently.


Notes.

  1. The Dow Jones report shares number of exits, and money raised in IPOs. However, a lack of (publicly available) numbers about VC exits in those IPOs, and mostly private nature of the M&A deals, means the liquidation £s from them can’t be easily calculated. Additionally, how many of the returns from exits were available for reinvestment, and how many were returned to LPs is unclear.
  2. The document reports VC investment amount into European companies, not specifying how much of it iscoming from European VCs
  3. An interesting bit that stood out for me in the 3Q 2014 report is how, after a while, UK has been displaced from top of the investment pie by Germany. VC investment in UK appears to has slightly declined from €0.63 B in Q2 to €0.53 B in Q3. At the same time, the investments in Germany almost quadrupled from €0.34 B in Q2 to €1.22 B in Q3.
VC Investment, country splits in Europe

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