A prominent European VC, renowned for backing innovators like Revolt and Wayve, has successfully secured a modern-day $1.3 billion, spread across two funds, in a significant fundraising effort. Its Early-Stage Fund IX is set to receive a substantial $615 million, while its Development Fund II will secure an even larger amount of $685 million. TechCrunch’s discussions with venture capitalists yielded a response marked by guarded enthusiasm.
European venture capital is regaining momentum after a sluggish period following the zero-interest-rate policy and COVID-fueled market surge in 2021 and 2022, signaling a resurgence in investment activity.
Based on analysis, European venture capital (VC) funds have consistently outperformed their US counterparts. Across durations spanning over 10 to 15 years, primarily drawing upon insights from MSCI ESG and Cambridge Associates.
During a TechCrunch interview, Companion CEO Suranga Chandratillake noted that the company secured the funding surge relatively swiftly, stating: “We’ve never raised funds as quickly as this before.” The majority of the recent revenue stemmed from the reprinting of existing long-playing records.
He credits the fund’s success to an unnamed US-based institution. “What we’ve heard repeatedly is that European business appears as a stable, reliable, and enduring part of the global VC landscape – something that seems like old news to me or you, but it’s remarkable how long it takes for this perception to permeate globally.”
According to data from Dealroom, European AI startups such as Mistral, Wayve, and Poolside AI currently make up 18% of the total VC funding in Europe, a notable trend in the industry. Following a series of successful fundraises by various venture capital firms across Europe, including Accel’s European arm, Index Ventures, and Creandum, Balderton has now joined the ranks.
Over the past year, Balderton has successfully added 12 new companies to its portfolio: Checkly, SAVA, Tinybird, Qargo, Huspy, Trava, Payflows, Scalable Capital, Lassie, Author, Anytype, and Deepset.
Notwithstanding its exclusive European focus, the agency has largely overlooked the opportunity to invest in the pioneering AI startups emerging from Silicon Valley’s “foundational” wave, akin to OpenAI and Anthropic. Companies like these have been backed by major US corporate investors, echoing the likes of Andreessen Horowitz, Sequoia Capital, and Lightspeed Venture Partners – each having established a presence in London.
Balderton Capital has specifically identified London and Paris as crucial hubs for fostering innovation, highlighting their significance in its investment strategy. Despite having Bernard Liautaud, a French national, as the managing partner of the fund, Balderton did not hesitate to back the Paris-based venture Mistral.
“We anticipate that Mistral is an exceptional organization with no negative connotations surrounding its employees or objectives,” Chandratillake informed me. As we anticipate, securing funds can be particularly challenging for an early-stage, targeted venture capital firm like ours, due to our need to scale rapidly to stay competitive with industry leaders. In many start-up and entrepreneurial environments, early-career professionals often find themselves overwhelmed and struggling to make a meaningful impact. You won’t have the financial resources or capacity to sustain operations and pay out large sums in excess of tens of millions of dollars. Unless you’re willing to adapt quickly, you risk getting crushed beneath the corporate cap table, losing all sense of purpose as a director, and facing numerous other consequences. It wasn’t an ideal fit for our investment strategy. That doesn’t necessarily mean that this company is unimportant. This isn’t a suitable fit for our organization.
Can this approach serve as a viable alternative to directly observing the AI ecosystem’s evolution and identifying emerging trends by focusing on rising firms that are driving innovation in the space? “We envision fundamental forms of imagination, and presume that a healthy marketplace for such creations exists.” Despite our predictions of a massive upfront investment, it appears that private equity corporations and hyperscale public firms, flush with cash from their core businesses, are far better suited to build such a foundational model.
“We anticipate many innovative companies will be established, utilizing this technology to address specific challenges in various ways, ultimately directing a significant portion of our investment towards these initiatives.” We feature Wayve in our portfolio, a trailblazing AI company that has consistently secured the largest funding round of any European firm to date. I think we genuinely have a positive outlook on AI.
TechCrunch polled various venture capitalists to gauge industry sentiment on the uptick.
Brent Hoberman, co-founder of a $400 million asset-under-management seed fund, remarked that “it’s extremely heartening for Europe, especially with respect to the continent-focused approach and statistics indicating European venture capitalists outperform their American counterparts.” Europe’s fashion industry has a long-standing tradition of drawing inspiration from the United States, and this practice is widely accepted as legitimate.
While concise, the statement could be further clarified for better understanding. Here’s a revised version:
“I appreciate that.”
(Note: I’ve added more context to make it clearer what Susanne Najafi means by her initial phrase) Extra Capital for European Startups: Empowering Early and Progressive Ventures. Considering the pace of progress, our agency firmly believes that European startups would find it more convenient to secure funding through local channels rather than relying solely on US-based investors. funds for that. Despite this, potential links and value-additions still exist, making European progress funds more competitive in their pursuit.
An anonymous venture capitalist concurred with Balderton’s decision to not invest in Mistral, citing the firm’s pragmatic approach: “Balderton has always had a straightforward, unflappable perspective… They won’t be the flashiest investor, but they’re consistently profitable.” While they may have overlooked numerous anomalies throughout their history, they successfully curated a well-rounded collection by carefully choosing several exceptional cases. I’d name them sober decision-makers. Institutions of significant scale require this feature in conjunction with recurring business models. Investing in Balderton Capital is equivalent to investing in the combined expertise of Revaia, Highland Europe, and Verdane.
Notwithstanding the widespread enthusiasm, some people remain unimpressed. Andrew J Scott, founding associate, stressed the importance of European Sequence A-plus managers having the capability to make significant, foundational bets on a company’s core technology or intellectual property, rather than simply focusing on software layer applications that provide established revenue streams? If they fail to act, the United States will face severe consequences. Will management AI dominate the next three decades, similarly controlling online, search, and cloud computing just as it does today?
