It’s been a long old week at Slush. I think every third person on my Monday morning flight from London Gatwick to Helsinki was heading there too — and as I’m writing this at the airport on the way home I’m fairly sure there is a founder on my right in the coffee shop still pitching.
Plus, read on for what I made of the panel I moderated on the EU Inc movement — and for what Atomico’s 10th State of European Tech report tells us about the VC landscape.
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Europe’s startup scene has a Christmas list for the new European Commission, which gets to work on December 1. More than 13k founders, investors and startup associations have signeda petitionasking for the creation of a new pan-European legal entity — dubbed ‘EU Inc’ — to make it easier to grow globally significant businesses from Europe.
The idea — which is just that at the moment, and needs quite a bit of fleshing out — would:
Standardise investment processes — making it easier, for example, for a German angel investor to back their first Finnish startup without having to wrap their head around the rules and regulations in Finland.
Establish a unified stock options programme to help more people benefit from a startup’s success.
Digitise the business incorporation process — moving it online and into English, and making it a whole lot faster than it is in many European countries at the moment.
“In the startup world, momentum is everything. Anything that slows you down doesn’t just slow you down — it kills you by stopping you from reaching escape velocity,” Andreas Klinger, an investor at Prototype Capital and one of the leaders of the initiative, told Siftedwhen the petition launched.
He also joined me on the big stage at Slush, along with Finnish MEP Aura Salla, to share how it’s going — and what might happen next.
The conversation didn’t, I’m afraid, fill me with confidence for the movement. Not because anyone thinks it’s a bad idea, or that it wouldn’t be helpful — but because Salla made it sound nigh-on impossible to get the EU to make this happen.
“I don’t want to be a party pooper, but I definitely will be,” she said. (Skip to 3:17 to watch the panel.) “We had a similar proposal in 2004 in the European Commission — 20 years ago. As you know the European Commission is the one putting these proposals out there, the European Parliament is the one that makes this proposal as a ‘Christmas tree’, and the European Council who will block it or try to implement it in different ways in different member states. I’m sorry that’s a gloomy picture of EU regulation.”
The EU needs to stop over-regulating and ensure it has a real, competitive single market, she said (a message she repeatedon another stage).
“We need to hold the new Commission accountable — that they will not propose any more regulation… and take this kind of initiative and make it reality.
“We need all of you to lobby, heavily, your MEPs and MPs at the national level to make this happen.”
Klinger is more optimistic — plans for a ‘28th regime’ are part of the workflow for the next Commission — but one big question, he admits, is whether they would implement something that is “actually useful for the startup community”.
What do you think of the likelihood of the plans becoming reality? And if yes, when? Let me know your thoughts.
It has been a mixed bag so far for VCs in 2024,according to Atomico’s new State of European Tech report. But what have investors doing deals in Europe — the number of which has more than doubled in the past decade to nearly 6,000, including foreign investors — been up to in the past year?
Fundraising, for one, proved challenging once again for VCs. In 2023, VC fundraising fell more than 40% from 2022, and the first half of 2024 showed a further decline.
Another big trend: founders raising a lot more debt. 2024 was the biggest year on record in Europe for venture debt, with debt rounds equal to 14% ($4.7bn) of total VC funding this year through Q3. As Sonya Iovieno, head of venture and growth at HSBC Innovation Banking,toldAmy back in August: “Companies are being cautious in the current economic climate” — many are raising debt to “bolster the balance sheet and add an additional runway buffer”.
There’s still heaps of dry powder left for VCs to invest, although money raised for VC funds so far this year has slumped compared to last year.
Between 2015 and 2023, there was a 3x increase in dry powder from $34bn to $104bn. The growth curve is flattening, though. While dry powder rose by 44% between 2018-2020, it increased by just 13% between 2021-2023.
VC funds are getting bigger. Though many VCs have opted to keep raising consistent, smaller funds, the median value of VC funds closed in the first half of 2024 was $85m — more than twice the size of the $37m median fund size in 2015. The share of total VC funding captured by €250m+ VC funds, meanwhile, has risen from 30% in 2015 to 54% in the first half of 2024.
Plus, the landscape is dominated by Europe’s mega funds: the 10 largest funds in 2024 have a combined value of $6.8bn, with eight $500m-plus funds being announced by September this year.
The overall trend of the past 10 years is up and to the right, in terms of factors like the number of investors, fund size and dry powder. But so far this year hasn’t been gangbusters for VCs — and Europe still has a long way to go.
Berlin-based Nucleus Capital is raisinga €40m fund to invest in companies rethinking food production or industrial production using synthetic biology. Why so specific? “A climate fund is way too generic,” general partner Maximilian Schwarz told my colleague Freya Pratty. “The necessity to have green DNA in any kind of business will increase tremendously in the coming years, so I don't think a climate fund is a differentiator. I think every generalist today will be a climate fund in 10 years.”
Schwarz previously worked at Berlin-based foodtech fund FoodLabs and cofounded Nucleus alongside his school friend Dr Isabella Fandrych, an industrial engineer.
The new fund (Nucleus had a previous €7m ‘proof of concept’ fund) is 90% subscribed, and LPs include KfW Capital — its first emerging manager bet — plus the EIF.
Portugal and Spain-based Bynd VC has announced a first close of its third fund to invest in pre-seed and seed stage startups in Iberia. It’s closed over 60% of its €40m target, it tells Sifted.
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Peter Cowley, a prominent UK angel investor and long-time chair of Cambridge Angels,has diedaged 69, his family announced this week.
Claus left in July, and Traversone departed in September, according to their LinkedIn accounts. Three of the five-person founding team remain.
Amalia Kontesi, head of communications for the NIF, confirmed the departures, adding the firm wishes the pair the “best of luck in their future endeavours and are grateful for their deep commitment to our mission.”
When asked about plans to replace Traversone as managing partner, Kontesi said the NIF had “nothing to report on this front”.
General Catalyst partner and Helsing, Mistral board member Jeannette zu Fürstenberg on how to build more businesses like them
My latest podcast guestis Jeannette zu Fürstenberg, managing director at global VC firm General Catalyst and founder of La Famiglia VC — the Berlin-based early-stage investor which merged with General Catalyst last year, in a move which caught the eye of everyone in the European venture scene.
We also spoke about how General Catalyst is thinking about investing in the energy transition and climate resilience.
“What we're thinking through as a firm currently is, how do we meaningfully get involved in the whole project activation part? How do we help companies enable a go-to-market pathway and help them get through the permitting and the implementation process to get to meaningful scale, and what is the right capital framework to activate these businesses?
“I don't think it's pure venture dollars that will do the job. A lot of it will come down to infrastructure-related financing options. That's where we are spending a tonne of time currently as a firm — to truly bridge that gap and come up with creative solutions to drive that.”
Zu Fürstenberg wouldn’t delve into details — but my spidey senses tell me this is something to watch closely. If your VC firm is also thinking through how to invest in climate infrastructure in novel ways, please get in touch.
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