Venture Capital is a popular career option for LBS students. The European VC scene is growing, with London at the epicenter. The School’s Strategy and Entrepreneurship concentration along with a range of extracurricular activities help us to learn how to succeed in these roles after graduation. In this article, Marco Napa MBA2022 talks us through the recent panel event: changing landscapes in VC.
On April 15, Saul Klein (Founding Partner, LocalGlobe and Latitude) and Alex Ferrara (Partner, Bessemer Venture Partners) explained Europe’s march towards becoming a major force in the venture capital (VC) world and illustrated their roadmap for the region’s future. This panel was organized by the LBS PE/ VC Club and was moderated by Luisa Alemany (Associate Professor of Management Practice in Strategy & Entrepreneurship at LBS).
New Palo Alto
U.S., U.S., U.S. 15 years ago, one would see the same geographic fund allocation on LPs across the board. The United States completely owned the VC space, particularly due to the power of Silicon Valley. Slowly, China entered the scene, followed by India and Israel. It was only in the last few years that Europe moved from a frontier market to a serious player. Today, London, Paris and Amsterdam – the “New Palo Alto” – combine for the third-largest hub after the Bay Area and Beijing. It is the cultural approach to innovation that sets this region apart. Being a melting pot of different histories and perspectives breeds very extensive and inclusive ideas. Combined with raw talent (both home-grown and migratory) and an inflow of global resources, the New Palo Alto is producing more unicorns than ever. At this rate, the region should stay competitive at least for the next 10-20 years.
Kings of the Early Stage
For the European market, earlier is better. Globally, 30% of all seed-stage investments by value come from the region. That number drops to 21%, 14% and 12% for Series A, B, and the mega-rounds respectively. In fact, a lot of startups get their early footing in Europe and then cross the Atlantic for the bigger funding rounds. This is particularly prevalent in B2B software and SaaS companies, where US corporates are still the greatest spenders and adopters of IT in the world. However, even that trend is slowly being challenged as we have seen the likes of Spotify, Aiden, and TeamViewer all choosing to stay in their respective countries.
We Ain’t Seen Nothing Yet
Despite the growth in private markets, it is still nowhere near its full potential. For example, the entire US venture industry is only equal to 1% of the total pension fund allocation in public capital markets. There’s big money still to be had. With valuations at their historic highs, LPs are not getting the returns they need from stocks, bonds, and other financial market assets. It is only a matter of time until we see a meaningful outflow from traditional investment vehicles and into the venture space.
It was great to hear the speakers share their thoughts and respond candidly to both questions from the moderator and the LBS audience!
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About the author: Marco Napa is an MBA candidate at the London Business School. He is working to raise both awareness and funding for sustainable startups in the food and agriculture sector. Previously, he worked in Financial Markets at ING Bank offices in Singapore and Manila.