The VC landscape in Europe Sia Houchangnia

March 2nd

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Some of the top VCs our companies are raising from

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1. The current funding environment

“We need to make the economics work… We have to understand that every round of funding must be treated as our last.”

William Shu Founder Deliveroo

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European Tech Scene Begins to Feel Silicon Valley’s Woes, Mark Scott, The New York Times, February 2016

Public & private markets are interconnected

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Yahoo Finance, March 2016

The story in short…

Upcycle

1. More companies raising large rounds on unproven metrics and fundamentals

2. non VC-expert money coming in (Hedge Funds, Family Offices, Corporates)

3. Private markets valuing companies at 50-100x revenue

4. US investors flying to Europe not just for holidays

Economic slowdown —> market correction

1. Public stock markets falling

2. Tech IPOs trading below issue price

3. Investors raising their expectations

4. Fundraising taking longer and rounds closing at lower valuations

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What the data shows

Venture Pulse Q4 2015, KPMG & CBinsights, January 2016

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2. Where is the capital coming from?

Leading global VC firms

Large European VC firms

Emerging European VC firms

Some of the leading European VC firms

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Selected examples of new funds recently launched

The State of European Tech, Slush & Atomico, November 2015

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The key role of government funding

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The State of European Venture Capital, BCG, October 2015

US money also contributing to fill the gap

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2015 Anual European Venture Industry Report, PitchBook, January 2016

The State of European Tech, Slush & Atomico, November 2015

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Selected examples of European investments made by US VC firms

3. The geographic disparities

VC firms all across Europe

€70Maverage size

>800VC firms

80%manage < €100M

Techstars, Investors in Europe, December 2015

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The State of European Venture Capital, BCG, October 2015

…but the capital is not evenly distributed across the continent

The State of European Tech, Slush & Atomico, November 2015

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A closer look at the main hubs

The State of European Tech, Slush & Atomico, November 2015

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4. What’s next for Europe?

More and more European success stories

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European Unicorns: Do They Have Legs?, GP Bullhound, June 2015

The generational effect

The State of European Tech, Slush & Atomico, November 2015

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Increasing number of entrepreneurs turned investors in Europe

The State of European Tech, Slush & Atomico, November 2015

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…But still lots of room to grow

Entrepreneurship at a Glance 2015, OECD. August 2015

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We need to have larger funds

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2015 Anual European Venture Industry Report, PitchBook, January 2016

…funding larger rounds

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2015 Anual European Venture Industry Report, PitchBook, January 2016

5. Conclusion

The correction in Europe should not be as bad as the US… Why?

Valuations less inflated than in US and China

Weak EUR & weakening GBP contribute to attract US capital

Very low interest rates in EU pushes pension funds / mutual funds to consider asset classes like VC, which drive higher returns

Government agencies maintaining / increasing their support

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3 things to remember if you fundraise now

1. Keep your burn under control

2. Demonstrate a clear path towards monetization

3. Raise for 18 months

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Thank you

Sia Houchangnia - Investment Team at Seedcamp @SiaHouchangnia