Tradeshift, the social invoicing startup we broke in 2009, has secured $17 million in funding, a move which values it at $137 million in a round led by Moscow based funds ru-Net and Kite Ventures. Existing investor, Notion Capital, also participated.
CEO Christian Lanng says the fact the money was raised outside the Valley show’s the power balance is shifting towards Europe. We have a different view: this is a deal struck where the wheels were probably greased by existing investor Morten Lund and close associate Edward Shenderovich of Kite Ventures. It’s highly significant that Russian investors are starting to flesh their muscles outside Russia, and not just DST for a change.
Here’s how I think we should take this news: The Valley is becoming way too expensive, both for startups and investors. Yes, it’s probably easier to raise there. Yes, it’s a fast paced environment with a lot of talent. But if you can raise in Europe, keep capital costs down, hire the talent and still be global (hey, just put a darn office in the Valley, don’t move there), then stay in Europe.
As a VC in Berlin said to me recently: “Valley VCs are starting to tell me, don’t bring your portfolio companies here. It’s just too expensive right now.”
Ok, sure, that’s nice for investors who always want to keep valuations down, of course. And fair enough – if you want to enter the bun-fight that is the Valley as a startup, go for it. But if you can get a decent valuation in Europe, and that’s where you’ve built the product with a great team, like Tradeshift has, then stay.
Increasingly that means tapping into the incredible power of Russian investors, especially at the B-round stage. If you can make it work, then hey, go for it.