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):
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 – 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?
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.
- 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.
- The document reports VC investment amount into European companies, not specifying how much of it iscoming from European VCs
- 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.