Reading Sebastian Mallaby’s US-centric account of European venture capital (The Weekend Essay, Life & Arts, February 5) I am reminded that many in Silicon Valley still see Europe as a collection of museums and a place to go on vacation. And that’s OK with us.
Far from being a contrarian bet in 2019, Europe already had 93 unicorns (private tech companies worth at least $1bn), with enterprise value of $200bn, including exits achieved by Adyen, Farfetch, ElasticSearch and Spotify. Venture capital investment in Europe, worth $42bn in 2019, had grown to $113bn by 2021, despite the economic hit of the global pandemic.
Europe’s venture capital sector has not suddenly ignited because of the arrival of a group of US investors with deep pockets, and Europe’s business history is far from “lacklustre”, as Mallaby asserts. In fact returns from European VC-backed tech start-ups over the past two decades have been higher than those in the US. Far from resenting Valley-style venture capital, European VCs have learned from the best practice of the West Coast.
We welcome the influx of US capital, which accounted for 38 per cent of all money invested in UK venture capital last year, but we also note that recent arrivals are still overwhelmingly investing at growth stage, with over 85 per cent of their capital invested after their European counterparts have made the much harder, riskier decisions at seed and series A stages, the name given to the first significant round of VC financing.
With more than 300 unicorns and almost 30 “decacorns” (a company valued over $10bn), the risks European VCs took, and continue to take, have generated significant returns and those will assure the success of the next generation of European tech, which our US counterparts are so keen to participate in.
Ophelia Brown
Founder, Blossom Capital, London N1, UK
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