European Seed is GREAT value. Data from 14,000+ deals in the last 15 months shows a big difference in entry price at Seed between the US and Europe. The price difference is consistent after. Funds successfully investing in Europe with ties to US market opportunities can create material alpha. #VC #venturecapital
Graf André Popov
7mo
Interesting data points, but your conclusions are premature. There might be more to the story. Here are some reasons why a valuation gap might exist: Market maturity: The US tech sector is arguably more mature, with a proven track record of successful exits. This could lead VCs to be more comfortable placing higher initial bets on promising US startups. Risk tolerance: European investors might be inherently more risk-averse, requiring more traction or validation before investing larger sums at the seed stage. Industry focus: The data might be skewed by industry differences. Seed funding for certain sectors, like biotech or hardware, might naturally be higher due to longer development timelines. Long-term performance: While entry price is important, it's just one data point. Ultimately, the success of VC investments is measured by the return on investment achieved at the exit stage. Overall, the data is valuable, but a deeper analysis is needed to understand the true reasons behind the US-Europe seed funding gap.
Hugues Hallot
8mo
Considering exit market potential in Europe versus US, the key point is how will the fund support an US expansion. James Heath What is the data source?
Very interesting data in fact James Heath, thanks for sharing! Across Europe there are also big differences between countries, which can serve as an "arbitrage" opportunity when these companies start growing international and international funds become aware at later stages of funding (Series A+). Definitely something to have in mind :)
Serhat Pala
8mo
Great post James Heath, thank you for sharing. This is exactly why we have the investment thesis (investing Seed Stage European Origin with high US TAM and help them expand to US ecosystem with additional US investors) we have at Cross Ocean Ventures. If there is any more data or analysis you could share on this subject would love to know more .
Silvio Busonero
8mo
That's consistent with my experience a founder of EU company. EU has cheaper startups, founders (less equity and salary), but great talent. for some sectors the gap can even be wider
Vuk D.
8mo
For early stage it makes sense to me: Large, unified market versus smaller market segments (European countries)... The DEF+ rounds are on the other hand interesting to see and my guess is that the premium is there due to revenue or some other factor... What would really be interesting and a good comparison is the $revenue/$investment per round...
Tradyom
8mo
Leveraging ties to the US market for European investments could indeed yield significant alpha.
Lucio Orazi
8mo
Nice insights on Seed investment trends. 🚀
Pre-seed VC | AI-native Founders
8moGrabbing a greater chunk of a startup does not mean success for the VCs. Can disincentivize founders, especially if they put in the work of building a cap table dilution forecast, potentially finding out that the founders get minimal returns during an exit. Maxim Matias