VC in Europe: for the VCs, entrepreneurs or investors?

Congrats to the Balderton team for raising a healthy new fund, chiming in at $430m. This on the back of Accel’s Europe fund which weighed in at $500m.

Mike Butcher makes the salient point that the Balderton focus will be much larger deals that the seed deals. And we know the reasons why. Fred Destin’s commentary as to why Balderton was able to raise a fund, while a three other London funds (who shall remain nameless) are on closing plan C, D, E or F, is relevant. (Fred is a friend of mine and partner at Atlas Venture), is salient. As is his explanation for the things Balderton is likely to look for. Short hand: if you don’t already genuinely know you are capable of raising capital in this environment, you won’t

But the most interesting commentary comes from a previous post of Fred’s where he ‘fesses up:

As a venture practitioner, what do I make of this ? I am not sure I ever bought (European) venture as an attractive asset class per se, more of a market segment for investment that I found highly invigorating and where, with the right strategy, some people would manage to make money. In some ways I must confess that, whilst there is a risk that we fall below critical mass, I find the whole process quite healthy and logical.

All in all, the next few years are likely to provide a great hunting ground for those savvy investors who manage to raise capital, with reduced competition for deals, reasonable valuations, capital efficient entrepreneurs and large corporates axing their innovation programmes. In fact, there is no doubt in my mind that 2008/2009, just like 2001/2002, will prove to be a great vintage year for newly raised funds. You know, that old argument about capital scarcity and fewer smart people to cancel each other’s returns might actually hold true.
[Fred’s emphasis, not mine]

It’s refreshingly frank! But probably does little to allay any suggesting that the biggest winners in much of European VCs are the VCs themselves!


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