A venture capital firm, Balderton Capital, has raised $400 million, which will be used to fund European technology startups. On Tuesday, the firm said the Series A phase startups would be the beneficiaries of the funds. Series A refers to startups that are looking to raise their significant initial funding with the use of technology in order to gain a competitive edge in the cut-throat market of the 21st century. The London-based firm further added that the annual target is approximately 12 investments. Europe’s technology division has been lagging behind its Chinese and US competitors, especially in valuations, inflows, and venture capital. The lag has happened in spite of the industry’s global heat-ups.
Atomico, a VC firm, last year stated that Europe was the center to twice as many tech Initial Public Offerings (IPO) as the US. Still, newly-listed European firms were reported to be outdoing their American competitors. Adyen, the Dutch outflow firm, recorded a significant IPO in 2018, seeing its share price grow over 50 percent since its entrance into the stock market. Speaking to CNBC, Lars Fjeldsoe-Nielsen, said that Europe has the potential to build a startup that can compete with Silicon Valley giants and China online platforms. Fjeldsoe-Nielsen is Balderton’s general associate and former Uber executive. He mentioned Google, Facebook, Tencent, and Alibaba as the companies of the future.
In comparison to the US and European allies, Fjeldsoe-Nielsen said, Europe harbors tech firms with much lower valuations. The affordability is characterized by factors such as considerably lower housing and hiring costs. Balderton’s attention was triggered by interest from American investors in Europe’s private tech companies, thus launching a new investment fund. Balderton’s investment Revolut, a UK’s fintech firm, is an example of a company that is trying to compete with Chinese and US giants. Revolut is allegedly pursuing a $1.5bn funding round consisting of both convertible debt and equity that could value it up to $10bn. Revolut is yet to comment. First sponsored in 2015 by Balderton, Revolut incurred a $42.2m loss in 2018.
However, the venture capital industry has faced failure from unsuccessful tech companies eyeing to go public. The latest concern is that of WeWork, which Softbank has invested in and turned unprofitable. Thus, Fjeldsoe-Nielsen clearly states that profitability is the VC’s primary concern when injecting funds into a startup. Balderton’s latest funds launch has raised over $3bn across eight separate funds. Excluding Revolut, Balderton’s portfolio comprises Infarm, a German farming startup, and Voi Tech, a Swedish scooter-distribution firm.
