Amadeus Capital writes:
We have also seen an increasing supply of seed and early stage funding. The key in an improving environment is to ‘stick to your knitting’ and continue to build sustainable companies at sensible valuations.
Importantly, the visibility of European venture-backed companies has been raised by successes such as Just Eat, Zoopla, Zalando and Rocket Internet.
That said, fund raising is still not easy. Public funding in the EU accounts for 40% of European venture funds; persuading institutional and private investors to back the sector funds remains a challenge. US experience shows VC commitments to be cyclical, lagging public market performance by a year; 2015 may see more funds raised.
The Achilles’ Heel in European VC is the dearth of larger rounds of later stage funding to build bigger exits. A small number of growth capital funds do a great job, but we need more to achieve real scale. At Amadeus, we have supported four growth rounds of between $25m-$30m in 2014 and expect to raise further capital for growth investments in 2015.
On the wider front – a front that has implications for all European VCs – Jean-Claude Juncker’s proposal to earmark some €21bn of EU funds for investment in business and infrastructure through the European Fund for Strategic Investments (EFSI) is an initiative we are aiming to influence. It is our hope that some of the more than €300bn attracted from the private sector will be directed towards the venture community and provide stimulus to growth across Europe. We are actively supporting a recommendation that some of the EFSI funds be allocated to a private sector managed fund-of-funds programme that can attract institutional investors back to European venture capital.
For the VC community, it’s important that the plan’s stated commitment to fund innovation is delivered. Some innovation will derive from publicly-funded bodies and research, but much of it needs to come from the private sector. The plan therefore needs to support private technology companies, as well as funding primary research and infrastructure.
To achieve this, European VCs including Amadeus are pushing for a better regulatory and tax regime for private sector investment, so the EU remains a destination for global – not just European – investors. We therefore hope that the EFSI will be part of a larger package of reforms. If we can achieve this, the future should become increasingly beneficial for us, for our entrepreneurs and for investors.
A big thank you to our investors, our entrepreneurs and our advisers for all that they do in promoting innovation in Europe.