Klarna CEO Sebastian Siemiatkowski speaks at a technology and music conference in Stockholm, Sweden.
Johan Jeppsson | Bloomberg via Getty Images
LONDON – A growing number of renowned American technology investors are moving to Europe to capitalize on start-ups on the continent.
It comes after several European tech companies saw their valuations skyrocket during the coronavirus pandemic. Online events platform Hopin saw its valuation climb to $ 7.75 billion within two years of its incorporation, while company Klarna, which now buys and pays later, was recently valued at $ 46 billion. .
US venture capital firms are sending staff to Europe and hiring people already on the ground in the region as they seek to find the next Spotify or the next ASML, a Dutch semiconductor company whose market value has hit $ 331 billion amid the global chip crisis.
Veteran investor Alex Ferrara, partner of Bessemer Venture Partners, which has backed companies like LinkedIn and Pinterest, confirmed to CNBC that he moved from New York to London in September.
Also last month, Silicon Valley venture capital firm Lightspeed Ventures, which has invested in Snap and Epic Games, hired Paul Murphy and Ross Mason to lead the company’s push to Europe.
London-based Murphy was an early investor in London-based company Hopin, while Geneva-based Mason was the co-founder of MuleSoft, which was acquired by Salesforce in March 2018 for $ 6.5 billion. of dollars.
In London, Lightspeed also hired Adrian Radu, a former partner at investment bank Qatalyst Partners, according to LinkedIn. The trio join Rytis Vitkauskas, partner of Lightspeed, based in London since September 2019.
Elsewhere, General Catalyst, an investor in Airbnb and Stripe, hired London-based Chris Bischoff as managing director in May and Juliet Bailin as director in June, according to LinkedIn.
The number of European venture capital agreements with the participation of American investors rose from 359 in 2011 to 1,434 in 2021, according to Pitchbook data released Thursday. In 2011, European venture capital deals with the participation of US investors were collectively worth € 2.7 billion ($ 3.1 billion), while in 2021, deals were worth € 50.8 billion. euros.
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 or even hundreds of billions of dollars and some believe it is only a matter of time before Europe creates a tech company in the same scale than the American and Asian behemoths. .
“The consensus has turned from believing that Europe is a doomed technological backwater, to Europe having become a real global player with companies owning several categories,” the London investor told CNBC Hussein Kanji, pointing to Spotify, Klarna, Revolut and Darktrace.
“Everyone who matters is opening their doors to London (surprisingly the biggest European winner even though he’s no longer part of the European Union) or considering Europe deals,” said Kanji, partner at Hoxton Ventures.
“It’s great for the ecosystem because 3/4 of winning companies in Europe raise US funds anyway,” he added. “It just makes you think if European technology will be dominated by risk-seeking Americans, in the same way that the World Investment Bank and the City of London are largely dominated by American companies.”
Sequoia, perhaps the world’s best-known venture capital firm, announced its move to London last year, with veteran partner Matt Miller leaving San Francisco for the UK capital.
The investment firm, which supported Apple and Google in their early days, now has an office in Marylebone with four partners and a talent manager based there.
Sequoia has supported more than 10 companies in Europe since the opening of the London office. However, Sequoia’s total investments in the continent are considerably higher as it has been investing in Europe for over a decade, supporting Bristol-based AI chipmaker Graphcore and Stockholm-based Klarna along the way.
“Being physically on the ground… allows us to move faster… and scale up our efforts significantly,” Miller told CNBC last year. “I came [to London] a week a month, but you can’t see and do a lot of things. We thought that being in the field would make a significant difference in our ability to find opportunities earlier. “
In addition, the New York hedge fund Coatue Management confirmed this month its intention to open an office in Europe.
Coatue Ventures chairman Dan Rose told CNBC that the European office will be open in the near future without specifying where it will be located.
“We believe that Europe is emerging as an important hub of innovation in public and private markets, as evidenced by the increase in venture capital activity across the continent,” said Rose, who was previously an executive at Facebook and Amazon.
Some hesitations
However, not all US tech investors are rushing to hire people in Europe yet. Andreessen Horowitz, for example, still has no investors on the ground in Europe.
“They have completed five deals in UK and Europe in the past 12 months with a decent amount [of capital] but they are still not ready [to expand in Europe]”the CNBC source said.
Andreessen’s reluctance could be due to the fact that there are still plenty of opportunities in the United States or perhaps because things don’t always go as planned when American investors expand in Europe. A company spokesperson was not immediately available for comment when contacted by CNBC.
Google Ventures (now GV) launched an operation dedicated to Europe in 2015 with five partners based in London. Things did not go as planned, and the The European fund has been abandoned after the Californian headquarters would have refused “a lot” of investment ideas from the London partners.
GV still invests in Europe but now uses a global fund instead of a dedicated European fund, and the company has grown from five partners in London to just two.
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