European venture capital funds have produced better or as consistent returns compared with their US counterparts in the past two years, research finds.
European venture capital funds have produced better or as consistent returns compared with their US counterparts in the past two years, research finds.
A report from German firm Earlybird Venture Capital has found that despite the ongoing dampened perception of European venture capital, the past 24 months have seen a better quality of returns for European VCs than in America.
The report. Turning Venture Capital into Wisdom: Why returns in Europe are now outpacing the US, suggests that European venture capital has ‘truly reached an inflection point’ and has closed the gap with the industry across the Atlantic. It goes on to say that there has been ‘real performance’ in Europe among key indicators for ‘the first time in history’.
Analysing data from the European Venture Capital Association (EVCA), Dow Jones VentureSource and Earlybird’s own fund, the report finds that:
• Proportionally, Europe venture capital is now producing higher exit multiples than U.S. venture capital, as well as higher capital efficiency.
• Europe has seen some $15 billion in venture-backed liquidity events during the past two years, representing half of the $30 billion in US venture-backed liquidity events during the same period, yet occurring with only one fifth of the venture funding.
• Since 2005 there have been14 venture-backed exits of European start-ups larger than $1 billion including Luxembourg’s Skype, Swedish open source company mySQL, British sports betting platform Betfair and German online mortgage broker Interhyp.
• European VC-backed pre-and post-IPO performance also now matches or exceeds that of U.S. counterparts, while a higher share of European VC funds demonstrate top U.S. quartile performance.
Earlybird partner Jason Whitmire comments, ‘Clearly the message that venture capital is alive and well in Europe hasn’t gotten out. European entrepreneurs and VCs, for one, are notoriously shy about promoting themselves. The reality is, there are great venture opportunities in Europe, even if not all deals are making headlines’.
The report can be viewed here.
