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The Research
5.5
There is still work to be done to further diversify the institutional investor base of European VC
The source of funds for European and US VCs differ significantly
VC funds raised by LP type and region
While pension funds have contributed huge sums to European buyouts, their contribution to VC is still small
Funds raised by fund strategy and LP type
Pensions funds are, however, more important contributors of funding to follow-on VC funds than to first-time funds set up by new VC fund managers
Funds raised by fund type and type of LP
Corporates are an important source of capital for European VCs
- €4.8B
- amount invested by corporates into European VCs since 2012, equivalent to 17% of total funds raised during this period
The dependency on governments as a source of capital declines with larger fund size, while the contribution from pension funds and other institutional LP types increases thanks to the ability to deploy larger cheque sizes into the funds
VC funds raised by fund size and LP type
The role of public funding in Europe has been important in ensuring sufficient capital availability in the early and growth stages. As evidenced by increasing valuations of marquee companies, Europe has been able to close the gap compared to leading technology ecosystems in the world. This is already bringing more private investment into VC funds and innovative companies, which should be the first and foremost objective of our public funding initiatives.
While European buyout funds raise a significant share of capital from international LPs, European VC funds are overwhelmingly raised from within the region
Funds raised by fund strategy and region of LP
This varies, however, depending on the fund size. Larger funds of €250M+ raise a much larger share of capital from outside the region, where investors are typically looking to deploy larger cheque sizes
Funds raised by VC fund size and location of LP, sum of 2012-2016
There is an increased interest from institutional investors in European venture capital, driven by higher expectations of financial returns from European tech and the low interest rate environment, which has turned the attention of these investors towards alternative assets. We have noticed as well an increased interest from non-European institutional investors - notably sovereign wealth funds - in recent years, which reinforces the message that European tech is drawing worldwide attention.
