In a recent “Politico EU Confidential podcast”, Spotify’s CEO Daniel Ek told the story of how the Irish founders of payments giant, ‘Stripe’ felt they had to move from Dublin to San Francisco in order to secure investment to build their business. This was in 2010.
Daniel Ek questions whether this would be the same now. He points to a maturing of the VC/seed stage investment industry in Europe, the continent’s recent economic upturn and the increase in experience of both financiers and startup founders who have since had successful exits.
European Investment Trends
These sentiments are borne out by the data. Stats from Pitchbook’s recent European VC report show the average first financing round was worth €2 million (901 deals at a total value of €1.8bn) in 2017. The number of deals has decreased by 60% since 2014 but the average ticket size has increased from just under €900,000. This points to a loose inverse correlation between the two – since 2014 ticket sizes have doubled and deals numbers have halved. This is in part due to the trend of syndication among angel investors who look to simultaneously pool risk and allocate more cash to each startup.
… we hear that it is not deal flow that keeps them up at night but the quality of investment opportunities.
The data also shows that 33% of all investments are cross-border in Europe, with global financing hubs such as London skewing the data for the continent. No reliable data exists for super angel syndicated deals but it’s likely to be far lower. When we talk to our investors, we hear that it is not deal flow that keeps them up at night but the quality of investment opportunities.
Unlike the US, continental Europe is still very fragmented by borders, regulation, culture, language and development. Indeed, the very features that make Europe such an interesting place to live (cultural, linguistic, developmental diversity in such close proximity) make it equally challenging to scale a startup and invest cross-border despite the promises of the EU’s Digital Single Market and the recent trend of EU integration.
Jump Aboard the Boat?
This is where the European Super Angels Club (ESAC) seeks to plug a market gap. We aim to connect super angels, family offices and high-net-worth individuals into one pan-European network in order to share investment opportunities, knowledge and best practice. We are aware that investors often have an excellent overview of the high-growth startups and their fellow financiers within their local ecosystem but that they often operate like ‘islands’, with knowledge, contacts, and opportunities dropping off as soon as they go outside their immediate ‘territory’.
ESAC seeks to act as your boat captain – ferrying you to and from European startup ecosystems through our 5 roadshows (Vienna, Munich, Zurich, Madrid and Edinburgh in Q2 of 2018) and connecting you to the most important fellow passengers in your search for the best high-growth European startups.