Piotr Pisarz

Balderton's €1.3bn raise for European startups sparks debate: Does a bigger VC fund lead to better outcomes? First, consider: 💲 Larger rounds demand bigger funds, but returns get harder at scale 💲 $100M fund needs $1bn exit at 10% ownership for a single 1x return 💲 Most early-stage VCs target 3x returns, investing in 30+ companies 💲Management fees (typically 2%) grow with fund size Plus, the current landscape: Giants like Balderton, Index, and Accel are raising massive funds, while smaller firms stick to sub-$200M and focus on early-stage startups. Many VCs have maintained their previous fund sizes, while others are downsizing or struggling to raise new funds (or even returning un-invested capital to investors, as CRV recently announced they will do). Thus, weigh up the trade-offs: Larger funds (≥$500M): 📈 More firepower, full-cycle support 📉 Risk: Pressure to deploy capital, potentially lower returns Smaller funds (≤$200M): 🔍Agility, focused support, higher potential multiples ❌ Limited late-stage participation The future of European VC may not be one-size-fits-all. As the ecosystem matures, perhaps there's room for both Davids and Goliaths. What's your take? Would you bet on a nimble $150M fund or the muscle of a €1B+ vehicle? Source: Sifted #EuropeanVC #FundStrategy #StartupInvesting PS 🔔 Follow me for strategies and resources for startups and VCs! There's a better, streamlined way to raise capital: 💸https://foundersuite.com/ for startups 💸https://fundingstack.com/ for VCs and investors

30

1 Comment

TLDR: EIS should be scrapped as a fund structure but retained for Angel investments by individuals. Alex Chalmers has done all the work which in 10 years I've never got around to doing: why 95% of EIS/VCT funds are bad for our tech ecosystem, rip #startups off, and why as a Founder you should push back against their stupid fees or not take their money. https://lnkd.in/dnq9ZScS

35

7 Comments

"Funding Collapse sends investment in start-ups to six year low" The Times today covering the shocking stats that VenturePath uncovered, with our partner Beauhurst. Great quotes from supporters Michael Moore CEO, BVCA and Julian David CEO, techUK. * UK VC funding at Series A is -44% from last year, and worsening * Q3 24 is down a staggering 57% from Q2, itself down from Q1 * 9 in 10 seed funded startups cannot access Series A VC funding, the next 'rung on the funding ladder' * Just 32 future scaleup companies across the whole of the UK were able to access their first VC funding round in Q3...a 6 year low * Half a billion less capital is going in to UK scaleups at Series A, than just 2 years ago! As the UK scaleup funding gap widens, we are losing ground against other countries, at both startup stage (a position the UK worked hard to achieve, since 2011), and for scaleup support. OECD data: 13th in the world for scaleup support, and that's before Series A funding access dried up. I get that its confusing. Another report (BBB, Nations & Regions) released this week spoke of positive trends in private investment, stating "The data for Q2 2024 shows that investment value has continued to grow". Great, I love to see optimistic data. But under analysis that bundles venture with private equity (later stage), where a few megadeals skew the numbers. Otherwise the exact opposite is true. Our independent research here, for the UK ScaleUp Investment Mission, is laser beam focussed on Series A. The funding round where companies move from the c.1m startups launched each year, through the 2,179 that access seed funding, into the rarefied category of being recognised as future scaleups, attracting Series A funding (£2-10m). The UK venture landscape is currently funding just 248 pa of these companies, and declining. We've been sharing this urgent call for support with the new Government since the day after the election. I've personally met with several Ministers, and spoke to all the relevant Government departments. I will shamelessly repeat loudly what is at stake. UK scaleup funding at Series A has nearly halved in a year, and continues to decline steeply, more than halving in the last quarter. VenturePath developed The UK ScaleUp Investment Mission to convene the scaleup support ecosystem and £7bn of funders to help address this problem, to improve nationwide access to VC investment, and create more venture-backed successes. We have clear support, clear recommendations to reverse this decline in UK scaleup investment, and have made a clear ask of Government for participation in this, to ensure immediate action is taken to create the conditions for success for UK scaleups, ensuring the focus on growth isn't undermined by lack of capital, or equitable access to it. Government decision makers, we'd love your interest, to progress to action. HM Treasury: Rt Hon Rachel Reeves Spencer Livermore James Murray & CC Poppy Gustafsson (welcome to the debate).

738

192 Comments

Taavet Hinrikus and I made the Financial Times Due Diligence email. https://lnkd.in/ez2AuGQx One 'unintended consequence' is that if there is a 45% tax on carry and CGT (raising £40m per year, remember) it for all intents and purposes closes the door on new VCs in the UK. Especially started by teams from non-traditional backgrounds. To meet the GP commit, you need to be already part of the 'wealthy' as you cannot rely on the value you create - nearly half of it will disappear - to fund it. We have both had extremely successful startups which are few and far between. The smaller number of new VCs will therefore more likely increasingly be for people who have inherited the capital or can draw it from their already rich family. Probably not want they have in mind with this policy.

32

2 Comments

I couldn’t be prouder to be a Venture Partner at Isomer Capital (aka the best European FoF - at least for me) as we just announced the launch of our pioneering £100m secondaries fund. This fund is dedicated to acquiring stakes from LPs in various VC funds, tapping into a massive and largely unexplored market. 🌟 Key Highlights: - Focused Investment: Primarily targeting stakes in VC funds, with selective investments in private companies. - Robust Funding: Already over 20% funded, thanks to strong support from Nordic family offices and a German foundation. - Market Potential: With a growing number of private tech companies and a VC liquidity crunch, Europe's VC secondaries market is poised for rapid growth. - Track Record: This isn’t Isomer’s first foray into the secondaries market. As a firm we’ve done several secondaries deals with portfolio companies and VC firms, including early-stage VC Seedcamp (in 2021) and mobility giant Bolt (in 2023). - Expert Team: Welcoming the amazing Omolade (Rachel) A., formerly of Coller Capital, as a principal to lead this initiative. 💡 Investment Strategy: - 65-75% of the fund will buy "LP interest" stakes in VC funds. - 15-25% will be directed towards stakes in companies. - Up to 15% reserved for flexible investment opportunities. 📈 Looking Ahead: We're targeting returns of 2-3x, with significant distributions expected in the next 4-7 years. As one of the few players in this space, we're not just participating in the market—we're driving it forward. Read all about it here: https://lnkd.in/dc7sbC3G #VentureCapital #SecondariesFund #EuropeanVC

23

1 Comment

As a non-executive director, if you're not networking with PE, you're missing a huge trick! Here's a guide to some of the prominent UK PE funds and their areas of focus: Large UK Private Equity Funds aka "The BIG boys!": 1. CVC Capital Partners - Generalist fund with a strong focus on consumer goods, healthcare, and financial services. 2. Apax Partners - Invests in technology, telecommunications, healthcare, and consumer services. 3. Permira - Targets consumer, healthcare, technology, and financial services sectors. 4. 3i Group plc - Focuses on mid-market investments across a variety of industries including technology, industrials, and consumer goods. 5. EQT Group - Specialises in technology, healthcare, and industrials. Mid-Sized UK Private Equity Funds: 1. Hg - Invests primarily in software and service-oriented businesses. 2. Ardian - Covers a broad spectrum including energy, technology, and financial services. 3. IK INVESTMENT PARTNERS LIMITED - Focuses on industrial technology, healthcare, and consumer products. 4. Cinven - Targets healthcare, financial services, and technology sectors. 5. Bain Capital Ventures Capital - Invests in a range of sectors including retail, healthcare, and industrials. Venture Capital & Growth Funds: 1. Balderton Capital - Focuses on early-stage technology and consumer investments. 2. Index Ventures - Invests in technology, life sciences, and consumer sectors. 3. Octopus Ventures - Specialises in early-stage investments in technology, healthcare, and fintech. 4. Accel - Targets growth-stage investments in technology and consumer sectors. 5. Seedcamp - Focuses on early-stage tech startups and scale-ups. Sector-Specific Funds: - Healthcare: Syncona Limited , Viatris Ventures - Invest in healthcare innovation and biotech. - Technology: Notion Capital , DN Capital - Specialises in tech-driven ventures and growth-stage tech companies. - Energy & Sustainability: Energy Impact Partners, Chrysalix Venture Capital - Focus on sustainable energy and clean tech. What Virtualnonexecs.com does is help you Identify the right fund for your skills and this involves understanding their focus areas, helping you align. We work with numerous PE, VC and Family Offices to identify talent in minutes! Check out: https://lnkd.in/d3na7CEC 🚀 To join Virtualnonexecs: https://lnkd.in/eXBj687 🔥 #nonexecutive #chair #pe #vc

32

5 Comments

Thinking 🤔 out loud - one of the biggest beneficiaries of GenAI in the enterprise and agentic worfklows will be software PE firms There are so many beaten down SaaS 🦄 they can buy on the cheap and with a GenAI playbook can now reduce costs even more dramatically And as the AI gets better and moves from just the easy stuff like support and code to more complex workflows, the profitability created is going to be 📈 We are going to see a ton of PE buyouts in the months ahead...

83

17 Comments

🎉 20VC Closes Fund III at $400M to Back Next-Gen Startups London-based venture capital firm 20VC, led by Founder and Managing Partner Harry Stebbings, has closed its third fund at a remarkable $400 million. Known for combining venture capital expertise with a powerful media platform, the firm continues to solidify its position at the forefront of the startup ecosystem. 💰 The Fund Breakdown: - $125M allocated for Seed investments, ranging from $100K to $3M. - $275M dedicated to Series A investments, ranging from $5M to $15M. Backers of the fund include renowned institutions such as MIT Investment Management Company, Horsley Bridge Partners, and RIT Capital Partners plc. 🚀 The 20VC Difference 20VC operates three sub-funds: 20Sales, 20Growth, and 20Product—each supported by top-tier experts from global tech giants. These specialists actively assist portfolio companies in scaling and achieving their full potential. The firm's innovative approach extends beyond traditional VC, leveraging its media platform, which features in-depth conversations with prominent figures from the business and venture capital worlds, fostering a unique blend of investment and insight. 🌟 Key Team Members Harry Stebbings – Founder & Managing Partner Kieran Hill – Partner, Pre-Seed & Seed Paul Bonnet – General Partner, Series A & Growth This latest fund positions 20VC to further support transformative startups, enabling them to grow from the earliest stages to impactful global players. ✅ Looking to raise capital for your #VCfund?   🤝 Need warm #LP introductions?   📝 Selling #secondaries to increase liquidity?   🧐 Looking for co-investments (Series A/Series B)?   ▶ Please use G+QUANT's link for inquiries and fund decks, or send your inquiry directly to [email protected] #VentureCapital #20VC #StartupFunding #SeedStage #SeriesA #VCNews #Innovation #TechInvestments #StartupEcosystem #Founders

166

10 Comments

When the first alphabet in these conversations changes from 'M" to 'B', you know the funding winter is transforming into spring 🌱 #VC #VentureCapital #Earlystagefunding Read more about the latest monthly funding report for VC funding in July 2024 here: ttps://https://lnkd.in/dhdWF8fP

8

🚀 Unlock the Potential of AI in Deal Sourcing and Screening! 🚀 The 2024 Investment Benchmark Report reveals that European VC firms face fluctuating engagement and deal flow. Top firms leverage data to adapt and thrive, showing a notable 86% uptick in Q4 2023 deals. 🌟 Key Takeaways: Data-Driven Decisions: Firms using multiple data sources outperform peers. Enhanced Network Growth: Proactive outreach leads to more deals. Tech Adoption: AI and automation streamline operations and improve efficiency. Empower your VC strategies with AI for better sourcing, screening, and success! 👉 Try Yuno AI and become an early beta tester. We're seeking feedback to create the best tool for identifying investment opportunities in the private market industry. Read the full report here - https://lnkd.in/ddgiyWxH #VentureCapital #AI #DealSourcing #Investment #TechInnovation

13

Great interview with one of the best VCs out there. Lot's of good stuff in this article. One point worth highlighting on the eternal debate whether there is enough growth capital in Europe: great companies will always manage to raise money, no matter where they are based.

12

Small VC funds vs. Large VC funds by the numbers:‍ By now, most people have definitely concluded that in VC, small funds outperform their larger fund counterparts. Our view, both heuristically and backed by our own data, is that small funds can materially outperform, but there is a clear added dimension of risk that shouldn't be ignored. First, what does our data say by fund size? Keep in mind that the data below is from 253 funds, with only pre-2019 vintage years being included (to eliminate the J-curve effect and our belief that 4-5 years need to pass before a directional stance can be taken on a fund). Also, the mean performance numbers may look inflated, but they include some large outliers and have mainly (by our measure) very high quality fund managers. Also, we expect final DPI will show a softening of perhaps 20-40% in these numbers over time as markdowns continue. TLDR: Small funds (0-100MM) definitely can outperform when successful, but come with a much higher level of volatility (and even this data set has survivorship bias). The challenge for risk mitigation for small funds is discovery, diligence, and building an appropriate level of diversification through picking multiple of these funds. This can be very time intensive and laborious for most investors (given nearly 70% of current VC managers raised funs that fall in this range) Large VC funds can be fundamentally different products when it comes to risk/return through the inherent characteristics they possess, including 1)More Series B and later exposure given the higher % of reserves these funds hold for follow-on relative to seed funds 2) more portfolio companies 3) typically larger teams and brands. Also, many larger brands staple offerings of early stage + growth, which by definition will provide lower volatility and should provide liquidity sooner (in theory). However, the tradeoff for less manager risk/lower vol is a tighter band of potential outcomes, with top-end DPI outliers being very rare given the basic math of venture (especially when premium carry is taken into account). At the end of the day, each investor needs to assess their own constraints of time, risk, and return expectations to develop a portfolio of VC funds that makes sense for them. Here is the data: Small Funds (0-100MM): Mean TVPI: 4.3 Standard Deviation: 2.4 Median Portfolio Companies: 26 Mid-Sized Funds (100-250MM): Mean TVPI: 3.6 Standard Deviation: 2.0 Median Portfolio Companies: 24 Mid-Large (250-500MM): MeanTVPI: 3.0 Standard Deviation: 1.2 Median Portfolio Companies: 35 Large (500MM+): Mean TVPI: 2.7 Standard Deviation: 0.9   Median Portfolio Companies: 43  #VentureCapital #InvestmentStrategy #PrivateMarkets #VCInsights #RiskManagement #PortfolioManagement #Allocate

320

30 Comments

Scale-up business guide to getting investor-ready: THE FINANCIALS (2/7) Before approaching investors, you need to get your management accounts and everything associated with how you make money and spend money in order. This article explains the essentials of your business’ financials. #Business #investorready #financials

1

HNY! Hope everyone had a great break. Quiet on here as head down. Such a lot of exciting things coming up: - More Tools for all scaleups to improve their growth trajectory - More Founders using VenturePath to secure their Series A-B investment rounds - More VCs joining VenturePath's VC Network - More Events (including a VC dinner for 50 on the 22nd and SuperScalers female founders event on the 30th) - More Partners joining our scaleup support ecosystem - More Data to publish on 2024 VC trends for the UK ScaleUp Investment Mission Busy January! We'll share more on these when we have a minute... If you can play a part, as a founder, VC, investor, partner, sponsor, data provider etc., there's still room for a conversation or coffee with you though 😉

34

5 Comments

Claudia - loved your YouTube post below. I wrote (but did not publish) a piece about what “Private Equity (PE) Doesn’t Understand About Venture Capital (VC).” Here it is: Though both Private Equity (PE) and Venture Capital (VC) are rooted in investing, they operate in starkly different ecosystems. PE, traditionally known for buying mature, stable companies and driving efficiencies, often misses the nuances of VC’s high-stakes world of funding nascent, innovative startups. The misalignment largely stems from differences in risk tolerance, time horizons, and value creation approaches. A primary misconception PE firms may have is underestimating the unpredictability and iterative nature of early-stage investing. PE deals generally involve extensive due diligence, steady cash flow analysis, and predictable returns over a five-to-seven-year horizon. In contrast, VCs embrace uncertainty, often betting on emerging technologies or revolutionary business models that may take over a decade to scale. As Sequoia’s Roelof Botha once remarked, “Early-stage VC is about being comfortable with being uncomfortable.” This willingness to navigate ambiguity is something PE investors might struggle with. For example, when Facebook was initially gaining traction, PE firms might have found it an unconvincing prospect. With no stable cash flow and little data to forecast future growth, PE firms would likely dismiss it as an unproven risk. VC, on the other hand, saw the potential in Facebook’s ability to capture user attention, scale its network, and, eventually, monetize through ads. They invested not because Facebook was a safe bet but because it presented a high-upside opportunity—a hallmark of VC thinking that often contrasts with PE’s conservatism. Another key difference is the approach to value creation. PE firms are accustomed to cutting costs, optimizing processes, and restructuring debt, aiming for immediate profitability. VCs, however, focus on growth and customer acquisition, often encouraging startups to “burn cash” to capture market share quickly. This “growth over profit” mentality may seem reckless to a PE investor, yet it’s fundamental to VC. Uber, for instance, operated at a loss for years, prioritizing market expansion over profitability—a strategy that might baffle PE professionals accustomed to financial stability. PE’s approach can clash with the cultural dynamics of startups. Startups thrive on flexibility, and fast decision-making—qualities that rigid corporate structures can stifle. PE’s operational playbook might include board meetings, quarterly targets, and management oversight that, while effective in mature businesses, can hinder a startup’s speed. In short, while PE and VC both drive business growth, PE’s structured, low-risk approach diverges sharply from VC’s high-risk, high-reward ethos. Understanding and respecting these differences can lead to more harmonious collaboration between these two distinct but interconnected sectors.

35

3 Comments

Private funds revolve around liquidity events so that they can pay out investors and collect carried interest, so how do GP's actually facilitate those events? You know all of the traditional ways like portfolio companies acquisitions and IPO's, but are you aware of the other not so talked about ways? How about IPO the whole fund? Yes, in most cases you can take the fund public. Sell the fund. Let's say the fund is in year 5 of 10 and is at a 3X. Someone may see the future potential and could buy-out the whole fund at say a 2.85X in cash. Fund merger. Another fund that may have a similar niche wants to join forces so they merge the two into 1. An easier way to get more fees, AUM and much easier than starting over from scratch. Investors and invested GP's get equity in the new fund which may come with perks.

3

2 Comments

How do investors price pre-seed rounds?  This is perhaps one of the most misunderstood aspects of fundraising.  Oftentimes, founders want some framework to better understand what market value is when raising capital into their business.  Public equities and later stage privates have a well defined matrix of revenue/margin profiles that dictate valuation, surely there must be some framework for arriving at a pre-seed valuation. So how do investors price startups that are pre-revenue, or have maybe one of two early customers? In reality, pricing is more a byproduct of a VC fund’s portfolio construction model than any metric of the underlying business.  VCs model out portfolios to include a certain number of companies with an ownership target in each startup.  There are variations to portfolio construction, and the chosen strategy will have a direct impact on the types of rounds a fund will participate in. For example, an early stage fund might raise a $60M fund to lead investments in 30 companies and target 12.5% ownership.   After management fees, there is ~$48M in investable capital.  Assuming a fund holds back ~30% for reserves(this number varies across funds) that leaves ~$30M to invest in initial checks.   In this case a fund must average $1M checks at $8M valuations to reach their intended ownership target of 12.5%.   When you are in diligence with a fund, they are first and foremost trying to get to a yes on the investment opportunity.  When arriving at a valuation though, the math outlined above is the determining factor, more so than any multiple of revenue on the business, or the stated desires of where a founder wants to raise capital.  At the end of the day, a VC is trying to arrive at a valuation that works within their portfolio strategy. This means they are very unlikely to price a deal at $15M cap given the aforementioned portfolio construction, as they would either not own enough($1M = 6.67% ownership) or have to cut too large a check( $1.875M = 12.5%). The thing that is most likely to move an investor off their target valuation is another investor in the picture that is driving the price higher, but even then there are upward bound limits of how high an investor is willing to price a deal. I always advise our port cos to ask an investor early in conversations what their ideal check size/valuation is to make sure there is alignment with the founder's objectives.    

56

4 Comments

Its's a deal flow time! We are about to share the details of 637 start-ups who joined Rare Founders London's largest #demoday 2 weeks ago with all the investors (only verified ones) in our community. If you are a #founder who is #fundraising and want to get more exposure to investors (IT'S FREE) - submit your details following the link in comments. If you are an #investor interested in pre-seed to series A start-ups join our community (link in comments) to get access access to the monthly deal flow. Please tag #investors and #founders who this might be applicable for.

105

51 Comments

Yesterday I had the pleasure of appearing on CNBC to talk about the state of tech in the UK and Europe, touching on the state of IPOs vs PE acquisitions, sectors to watch and where the opportunity lies. Thanks for a great discussion Arabile Gumede! Some thoughts from the interview: Signs of Success: The acquisition of UK tech companies by prestigious private equity firms like Thoma Bravo is a testament to the strength and success of the UK tech sector. It's a clear indicator that UK companies are building substantial value and attracting significant international interest. Vibrant Ecosystem: Despite challenges, the UK and Europe boast a vibrant tech ecosystem, particularly in AI, cybersecurity, and fintech. The market has now stabilised post-pandemic, offering a fertile ground for emerging companies to thrive. Opportunity for scale-up investment: Looking at investment into SaaS companies, Europe is on par with the US in the early stages. It is at the scale-up stage that a divide appears – support and more investment into Europe and the UK’s growth companies will further strengthen the region’s tech scene. Watch a clip from CNBC here: https://lnkd.in/d7J8_FNP #Oxx #UKtech #VC #growth

154

8 Comments