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On my view, probably the two main differences. 1- No unicorns "Given the weak public market for young companies in Europe, the primary avenue for their exit i
by elmar 12y ago
On my view, probably the two main differences.
1- No unicorns
"Given the weak public market for young companies in Europe, the primary avenue for their exit is a trade sale (merger or acquisition) rather than an IPO. Moreover, there is compelling evidence that exits via trade sales are, in general, not as lucrative as exits via IPOs. Thus, it has been argued, a key reason why VC firms in Europe underperform their American counterparts is the absence of a stock market that is eager to trade the shares of new companies."
2- No former entrepreneurs VC's
"Success breeds success: many American venture capitalists have run start-ups themselves. European ones tend to be bankers and lawyers with little operational experience and less appetite for risk. That is why they have focused on more mature companies rather than on young start-ups… And it is why Europe’s new angels are determined to focus on infant firms."
- pcrh 12y ago>No former entrepreneurs VC's In my experience this is the critical matter. The entrepreneurial business scene in London is dominated by the finance sector, which mostly involves shuttling money through various assets in order to harvest a bit each time it moves. As such, a lot of early stage technology VC is geared towards "tax efficiency" on the behalf of investors rather than potential for big gains from the technology. Note that this is raised as an issue several times in the OP. In contrast, one can easily raise multiple millions in order to attempt some novel wheeze in stock trading or playing some game on the financial markets.
- elmar 12y agothe typical UK/European VC as a financial education background, never started or worked in a Startup, and loves excel sheets with extensive projections and economical ratios.