IN THE world of start-ups the rule of thumb is that young American firms raise twice as much money in each round of financing as European ones—and twice as fast. Three European venture-capital firms that invest in young technology firms are trying to challenge that notion. They recently published numbers that show they are making some headway.
On September 2nd Seedcamp, which is also an “accelerator”, or start-up school, announced that in the six years of its existence it has invested $5.5m in 93 companies, which then went on to raise $120m from other sources—an average of $1.3m per start-up. “This makes us one of the leading seed-investors in the world,” says Reshma Sohoni of Seedcamp, which is backed by institutional and angel investors.
Earlybird, a more conventional venture fund based in Munich, has invested in 100 start-ups since 1997 and now has a portfolio of 27 companies with combined revenues of $1 billion. “Institutional investors are realising that Europe has good start-ups,” explains Ciaran O´Leary, a partner at the firm. In July Earlybird announced that it had closed a new fund of $200m, bringing the firm’s total capital under management to $800m.
Passion Capital, a combination of a seed-stage venture funds and a start-up incubator also based in London, has invested £5.7m ($8.9m) in its 34 portfolio companies, which have attracted nearly £36m from other venture-capital funds. Of the 21 firms Passion funded in the first year since it was founded in May 2011, two have already been bought and only two have since been wound down, Stefan Glaenzer of Passion Capital points out.
These numbers are certainly encouraging for Europe, but …