General Catalyst, Bessemer, Lightspeed expand start-up hunt to Europe

Sebastian Simyatkowski, CEO of Klarna, speaking at the Technology and Music Conference in Stockholm, Sweden.

Johan Gibson | Bloomberg via Getty Images

LONDON – A growing number of famous American technology investors are moving to Europe to take advantage of the continent’s startups.

This comes after several European tech companies saw their valuations skyrocket during the coronavirus pandemic. Online events platform Hopin saw its valuation skyrocket to $7.75 billion within two years of its founding, while buy-now-pay-as-you-go Klarna recently reached $46 billion.

US business ventures are moving staff to Europe and hiring people already on the ground in the region as they look to find the next Spotify or the next ASML, a Dutch semiconductor company that has grown its market value to $331 billion amid the global chip crisis.

Veteran investor Alex Ferrara, a partner at Bessemer Venture Partners, which has backed companies like LinkedIn and Pinterest, moved from New York to London in September, according to a venture capitalist familiar with the matter who requested anonymity due to the sensitive nature of the discussion. Ferrara did not immediately respond to CNBC’s request for comment.

Also last month, Silicon Valley’s Lightspeed Ventures, which has invested in Snap and Epic Games, appointed Paul Murphy and Ross Mason to lead the company’s push into Europe.

London-based Murphy was one of the early investors in London-based Houben, while Geneva-based Mason was the co-founder of MuleSoft, which Salesforce acquired in March 2018 for $6.5 billion.

In London, Lightspeed has also hired Adrian Radu, a former fellow at investment bank Qatalyst Partners, according to LinkedIn. The trio joins Lightspeed partner Rytis Vitkauskas, who has been based in London since September 2019.

Elsewhere, Airbnb and Stripe investor General Catalyst appointed London-based Chris Bischoff as managing director in May and Juliette Palin as lead manager in June, according to LinkedIn.

There is still no tech giant

While Europe still lacks a tech giant like Apple or Amazon, it is home to a growing number of tech companies worth tens and even hundreds of billions of dollars and some believe it’s just a matter of time before Europe builds a tech company on the same scale. Like the two giants in the United States and Asia.

“Consensus has shifted from believing that Europe is a doomed technology crisis, to Europe emerging as a true global player with multi-class companies,” London-based investor Hussein Kanji told CNBC, referring to Spotify, Clarna, Revolut and Darktris.

“Whoever is interested is opening a shop in London (it’s strange it is the big European winner despite not being in the EU anymore) or looking at European deals,” said Kanji, a partner at Hoxton Ventures.

“It’s great for the ecosystem because 3/4 of the winning companies in Europe are raising American money anyway,” he added. “It just makes you think about whether European technology will be dominated by risk-seeking Americans, just as US companies largely dominate global investment banking and the City of London.”

Sequoia, perhaps the world’s most famous venture capital firm, announced its move to London last year, with veteran partner Matt Miller relocating from San Francisco to the British capital.

The investment firm, which backed Apple and Google in its early days, now has an office in Marylebone with four partners and one talent manager based there.

Sequoia has supported more than 10 companies in Europe since opening its office in London. However, Sequoia’s total investment on the continent is significantly higher as it has been investing in Europe for more than a decade, supporting companies like Bristol-based AI chip maker Graphcore and Stockholm-based Klarna along the way.

“Being physically on the ground … enables us to move more quickly … and significantly raise the level of effort,” Miller told CNBC last year. “I was coming [to London] One week a month but you can only see and do so much. We felt that being on the ground would make a fundamental difference to our ability to find opportunities early on.”

Elsewhere, New York hedge fund Coatue Management confirmed this month that it plans to set up an office in Europe.

Dan Rose, president of Coteau Ventures, told CNBC that the European office will open sometime in the near future without specifying where it will be.

“We believe that Europe is emerging as an important innovation hub in both public and private markets, as evidenced by increased venture capital activity across the continent,” said Rose, who was previously an executive at Facebook and Amazon.

some frequency

However, not every American tech investor is in a hurry to hire people in Europe yet. Andreessen Horowitz, for example, still doesn’t have any investors on the ground in Europe.

“They have done five deals in the UK and Europe in the last 12 months for the right amount [of capital] But they are still not ready [to expand in Europe]A source told CNBC.

Andreessen’s reluctance may be due to the fact that there is still plenty of opportunity in the US or perhaps because things don’t always go as planned when US investors expand into Europe. A company spokesperson was not immediately available for comment when contacted by CNBC.

Google Ventures (now GV) launched a dedicated Europe operation in 2015 with five partners based in London. However, things did not go as planned, and the European fund was abandoned after the California headquarters were said to have rejected “lots” of investment ideas from the London partners.

GV still invests in Europe but now uses a global fund rather than a dedicated European fund, and the company has gone from five partners in London to just two.

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