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A recent study conducted 44 interviews across Europe with Venture Capitalists about the state of VC in Europe – here are their findings
We’ve heard it all before – “There’s not enough local money,” “Corporates don’t interact with startups,” “we need to think more Europe, less London v. Berlin v. Stockholm v. Paris v. …;” however, a recent study commissioned by the European Union was delivered by France Digitale called “Boosting Digital Startup Financing in Europe” has found that some of these problems are bigger than we thought.
The study saw 44 interviews across Europe with Venture Capitalists about the state of VC in Europe – here are their findings.
We need more Exit Opportunities
95% of interviewed Venture Capitals said that a lack of Exit Opportunities was the biggest challenege facing European Startups ( & VCs) today. Whether it be IPO, Acquisition, or a PE Buyout, it seems that exits are the exception, rather than the rule in Europe. IPO’s by Zalando, Criteo & King.com are rare, as are acquisitions like Skype, La Fourchette, Neolane & MySQL. One of the biggest issues is that IPO’s and acquisitions, like those mentioned, are almost always “to the benefit of a US player as there are almost no European [buyers]… conditions for tech IPOs…. are not favorable.”
In short, “The industry needs large European tech companies that can compete with US players.”
Distribution of VC across Europe is unbalanced
In Southern Europe (Portugal, Italy), a lack of early & seed stage kills companies early. In France, it’s the late stage that kills. The report found that “only 4 to 6 VC firms are able to fund [late stage] deals.” On the one hand, it’s normal that later stage investment come from foreign investors (your company should be international by then, and strategic investment can help enter certain markets); however, it is very rarely the case that foreign companies take European investment to enter Europe.
