The Vintage view 

When it comes to VC fundraising, we’re now in a world of “haves and have nots”, says Vintage Investment Partners’ Abe Finkelstein. 

“Europe didn’t get as out of control as the US and Israel in terms of amount of funds and funds raised [in the past few years], but funds coming back to market this year will face a much tougher fundraising environment,” he tells Sifted.

The outliers, the top 10%, will find it easy, he says — but there will be a long, long tail of VCs that should buckle up for the next 18 months (or more) of fundraising.

“Fund sizes may have to be cut back — but that’s a good thing, to be honest,” he says.

VCs will also have to make “tough decisions on which companies to support and which not to,” says Vintage managing partner Asaf Horesh. “A lot of funds invested through the cycle and kept on investing in companies and didn’t leave enough reserves.” That’ll be tough for startups left out in the cold — and could also be painful for VCs who don’t have the capital to follow on in companies that look set to become winners. 

Despite all that, it might still take some time for secondaries and M&A to really get into full swing, adds Horesh. “We’re only 18 months into the correction. Until mid-2022 the party was still going on — and so a lot of companies that are struggling now are still flooded with cash.” 

But there are already “big direct discounts” to be found for secondaries investors. Shares in startups are going for as much as 60% less than the last round value, says Finkelstein.

The most popular secondaries tend to be those involving companies closest to an IPO, he adds — although Vintage is less keen on buying stakes in those businesses because they’re less likely to see a big uptick in valuation between now and an exit. 

As for the fund of funds strategy, Vintage does back emerging managers — “it’s a big part of what we do,” says Finkelstein — so long as they’ve got an eye-catching CV. 

Vintage was an investor in the first funds of two of Europe’s first solo GPs, former Mosaic partner Mike Chalfen and former Earlybird investor Max Claussen. 

“We like investing in breakaway managers, those who came out of other funds. We wouldn’t invest in a first-time investor, but we would invest in a first-time fund.” 

VCs in Germany and the UK hired a whole lot of people in 2023.

According to data gathered by Konrad Kordowski, head of investor relations at Slush, 428 VC roles were advertised in Germany last year — more than double the number in the UK (186, of which 170 were in London). 

• 215 of those roles were in Berlin
• 112 were in Munich

European VCs advertised for more jobs than US VCs (just) — 1,068 compared to 1,026.

But it’s clear that not all roles are advertised. Only 16.5% of advertised roles were for senior positions. 

Hiring also tailed off over the course of the year, dropping from 799 openings worldwide in Q1 to 465 openings in Q4. 

European pre-seed and seed-stage startups raised €418m in January, up slightly from the €403m raised in December. There were 265 early-stage deals, a massive 38% drop on the 548 deals this time last year. 

Startups in Germany and the UK attracted over 50% of funding.

Episode 1, a London-based early-stage VC, has closed its third fund at £76m. Backers include British Patient Capital, NSSIF (the National Security Strategic Investment Fund) and Molten Ventures. It’ll write 10-15 cheques per year to pre-seed and seed-stage B2B startups. 

Hiro Tamura, the former Atomico partner who was dismissed in 2022 after complaints about his “management style”, is raising a new fund. 

Varsity VC, a new Paris-based VC started by ex-Société Générale deputy CEO Didier Valet, has raised €75m for its first fund, which it hopes to close at €150m. It’ll make seed investments in fintech, healthtech, climate tech and enterprise software startups.

New intel on funds… London-based VC Atomico, French private equity firm Keensight and Italian private equity firm FSI have received funding from the EIF’s €3.75bn growth fund of funds vehicle, confirming previous reporting by Sifted. The EIF says it’s close to closing a deal with a fourth, undisclosed fund too.