Lately a trend has emerged: European VCs putting down more roots in Silicon Valley to take advantage of the current scene and act as a bridge for European companies trying to form local partnerships, and of course as a mechanism for M&A or further funding with US-based VCs. One of the more recent firms to do this was Index Ventures, which a year ago put partners on the ground for the first time outside of its bases in the UK and Switzerland.
The latest to join that trend is Earlybird Venture Capital out of Berlin which has brought on Valley-based Konstantin Guericke as a venture partner. Is this part of a developing theme?
Guericke co-founded LinkedIn, where he was vice president of marketing, he took it to six million members and profitability. German born, he also served as CEO of jaxtr, a social communications start-up purchased by SabSe Technologies. He’s currently on the boards of several startups and mentors student entrepreneurs at Stanford University, where he graduated.
Guericke says startups coming out of Europe, and particularly Berlin, that are highly viral and globally scaling from Day One can “compete with the best in Silicon Valley and reach a worldwide audience.” He’s basically correct: far too many European startups are not suited to the continent’s small fragmented markets, don’t realise it soon enough and need to look elsewhere to scale.
Meanwhile, the VC trends in Europe continue.
As we know, Accel, which has a good footprint in London, is a firm with a large US arm already. The other main player in Europe are firms like Balderton, but it prefers, as does Eden Ventures and others, to bridge with US-based VCs.
The opposing view of course is that so long as you have contacts, you don’t need an office on the ground. The reverse is working in Berlin of course: VCs are flying in and out of the place (in some cases even just commenting from Munich or Hamburg) but few have felt the need to open full-blown offices. Perhaps the renowned Berlin winters are putting them off for now? Admittedly Wellington Partners is in Berlin so often it might as well have an office.
Earlybird is the exception, moving its full operations to Berlin and raising $100 million for their new fund.
But right now there is a debate raging about whether European Venture Capital has much of a future. Atlas’s Fred Destin has returned to that theme again recently saying Euro VC is too unwieldy, too in hock to governments and hide-bound by staff incentivised by management fees rather than exits.
Are European VCs, like their political equivalents in Brussels, now viewing Europe as a burning building with not enough exits, as UK PM Cameron once said of the Euro? Is that why we are seeing this attempt to bridge with the U.S.?
Conversely we’ve seen the rise of new entrants like Passion Capital and the soon-to-launch Hoxton Ventures. These guys are actually pretty optimistic about Europe and its ability to build companies outside the salary inflation (and the rest) of the Valley.
You pays your money and you takes your choice I guess.
Then there are quite different new entities like Blackbox VC where early stage startups literally live in a dorm in Atherton trying to catch the ear of the Valley.
More on that later, but for now let us know your thoughts in the comments.