The initial bet on a local startup pays off with a record number of Midas lists

In the mid-2000s, Reshma Sohni, an American-born newcomer to Europe, compared the continental technological ecosystem to Silicon Valley and couldn’t believe what she saw. “I don’t see why Europe wasn’t on the same scale,” he says. “We had landmass, we had population, so why wasn’t Europe technically the same kind of productivity?”

Sohni (No. 94) is now a newcomer to the Midas list, one of the record 12 investors from Europe, Israel and the Middle East. ForbesRanking of the world’s best venture capitalists in 2022. For Sohni, it was a journey that began in 2007 with the co-founding of Seedcamp, a year at INSEAD Business School in France. Originally an accelerator seedcamp was developed into a fund that invests in pre-seed and seed; The first checks on UiPath and Wise, both of which were released in 2021, took Sohni to this year’s rankings. (Along with partner Carlos Eduardo Espinal, he was already a fixture at Midas List Europe.)

To an outsider, Europe’s 2021 tech IPOs – not just UiPath and Wise, and Deliveroo – are reaching huge ratings for still-private companies such as Swedish fintech Clarna ($ 45.6 billion valuation) and German software maker Cellunis ($ 11 billion). valuation) can suddenly feel like a storm. But for European investors who have won the highest rewards, it’s been a long time coming.

Sohni’s colleagues Avi Yale (No. 66) of newcomer Israel-based Entry Capital and Powell Chudjinsky (No. 92) of Point Nine, Germany, started their firms during the 2008 financial crisis. Tom Stafford (No. 31) of DST Global, who moved to London from Hong Kong for the opening in 2017, said: European office of his firm. “Ten years of making it, probably even longer.”

Many Midas investors in Europe have set up shop in London. But one secret of their success: getting out of the UK capital city. Sohni, who found UiPath in Bucharest, said: “I took the ‘United States of Europe’ approach very closely. “I don’t think Romania is so different from London or Paris Copenhagen.”

“If you want to cover Europe, you have to travel a bit or zoom in a lot,” Chudjinski said. Over the years, he and partner Christoph Janz have decided to invest via Skype, as they both live in separate cities in Germany. This has helped them become more acceptable to startups in unusual locations, he added, such as the digital health agency DocPlanner, which maintains dual headquarters in Barcelona and Warsaw.

The broken markets of Europe’s different races and languages ​​have helped some startups to supercharge in the long run, others argue. “I think in certain cases, like Fintech, Europe is actually leading the charge,” said Sequoia Luciana Lixandru (No. 58). In addition to Stripe, the three largest fintech companies in the world, valued at $ 95 billion by investors, are currently located in Europe: Stockholm-based Clarna ($ 45.6 billion), London-based ($ 40 billion) and London-based Revolut ($ 33 ​​billion). There is Wise, which was founded by two Estonians, and Aden, located in Amsterdam. Index Ventures Partner Jan Hammer (No. 17) says, “Many countries, many payment systems, many currencies, some had to process the usability between those different national systems.”

Investors point to Israel’s more mature technology hub as a blueprint that the Nordic countries and other Eastern European unicorns could follow. “Fifteen years ago, Israelis were selling companies for $ 50 million to $ 100 million because they thought they could do as much as they could,” Yale said. Increasingly, Israeli entrepreneurs have returned from the experience of multinational companies based in the United States or locally to create startups, not sell, he said. Eyal’s portfolio company, for example, never moved its headquarters and went public last June.

Veterans of the Midas list, such as Frederick Castle (No. 82), who has been with the start-up firm Creandum since 2003, and Philip Bottery (No. 91), who has invested in Europe for Axel since 2011, say they are more blue-collar. Chip sees American companies hovering around the companies they monitor. Sequoia opened its London outpost in 2020 and others like Bessema Venture Partners, Iconic and Insight Partners have been around ever since.

“Three or four years ago, the competition was largely funded by local European funds,” Bottery said. Now that U.S. funds are looking to invest at an early stage, he notes: “It’s difficult to make an initial deal [in Europe] When you are in California. “

This means that over the next decade, Midas investors in Europe face more competition than ever before. This is a trade-off that they will take for optimism and lasting energy that is meant for the entrepreneurs of the ecosystem. “You are now confident that there are no inherent difficulties in building in Europe,” Hammer said.

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