Venture capital firm Balderton Capital is launching a new $400 million fund, which it says will be used to invest in early-stage European tech start-ups.
Balderton said Tuesday that the fund is targeted at start-ups raising funds at the Series A stage -in other words, businesses that are looking to raise their first significant round of funding. The company, which is based in London, added that the new fund would make roughly 12 investments per year.
Europe’s tech sector is seen as lagging behind its U.S. and Chinese counterparts, especially when it comes to venture capital, or VC, inflows and valuations. There have been some signs that the industry on the continent may be gathering steam though.
Last year, a report by another VC firm, Atomico, said that Europe was home to twice as many tech initial public offerings as the U.S., while newly-listed European firms were seen to be outperforming their American rivals. A prominent IPO in 2018 was that of Adyen’s, the Dutch payments firm, which has seen its share price rise over 50% since it debuted.
Lars Fjeldsoe-Nielsen, a general partner at Balderton, told CNBC he doesn’t think Europe is far from creating a tech firm that can rival Silicon Valley giants like Facebook and Google or large internet companies out of China like Alibaba and Tencent.
“I don’t think we’re far away at all,” said Fjeldsoe-Nielsen, a former Uber executive. “I spent 10 years in the Valley prior to joining Balderton. For me, there’s this shift that’s happened that means we’re not lagging behind now.”
He did however add that Europe is home to tech companies with much lower valuations than their U.S. and European peers, but said this was due to “considerably lower” hiring and housing costs. The venture capitalist suggested that interest from American investors in Europe’s private tech firms gave Balderton more impetus to launch a new fund.
“We’re actually seeing a lot of U.S. funds doing investments in Europe as well, because the tech talent is on par with what we’re seeing in the U.S.,” he said. “But the valuations are lower here. So there is an opportunity in the immediate future right now that is attractive.”