European Venture Capital Has Come Of Age
A new whitepaper from Adams Street Partners says that European venture capital has finally come of age.
The paper, The Rise of European Venture, authored by Ross Morrision, Partner, Primary Investments and Calum Paterson, Senior Associate, Primary Investments, suggests that the increasing number of unicorns in the region in recent years provides ample support for the investment case.
"Venture-backed global leaders such as Spotify, UiPath, Adyen and Revolut are evidence of the vibrancy of Europe’s ecosystem. We believe that these companies helped validate the thesis for investing in Europe and signalled to investors that Europe has the potential to produce both significant winners and returns," says the report.
Additionally, Adams Street Partners says that structural impediments that hindered the growth of the European venture ecosystem have largely disappeared. The report says that, prior to 2005, there was a lack of funding and an absence of a well-developed vc community. That's no longer the case.
"The presence of world class venture firms and the permanence of capital at all investment stages is a distinguishing factor from the European ecosystem of two decades ago. Whilst capital is an integral part of ecosystem success, top venture managers also bring the know-how, experience, contacts, and operating support that helps founders scale with more velocity and avoid common pitfalls," says the report.
Lastly, the report says that many companies are staying private for longer, meaning that the majority of enterprise value of European tech firms is owned by private markets investors. Adams Street says that venture capital firms have proven themselves adept at accessing Europe's best tech opportunities.
The firm's bullish stance is a medium-long term one.
"Europe is host to world class technical institutions and has a large supply of high caliber tech talent,15 motivated by the success and purpose that tech entrepreneurship can offer," says the report. "We believe that Europe’s venture community is healthier than ever, with sophisticated and well-capitalized firms ready to finance and support the next generation of entrepreneurs seeking to build global companies and help drive attractive investment performance."
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