Fundraising by venture capital funds in Europe has historically lagged that in the US and Asia. In the third quarter, funds investing in Europe accounted for just 13 percent of total fundraising and ranked fourth among geographic regions, behind North America, multi-regions and Asia, as Venture Capital Journal reported last week.
Although that data doesn’t represent the level of capital raised by fund managers based in Europe, it still speaks to the comparative weakness of Europe’s VC fundraising engine. In June, Sifted reported that 40 European first-time venture funds had announced a first or second close in 2023, down from 60 in 2022.
If fundraising has been tougher for venture funds in general in Europe, the challenges are all the more daunting for emerging managers, most of whom lack track records of successful exits and returns that LPs are more focused on now.
“[In] the conversation I had yesterday with one of the largest French VCs that’s been around for 25 years, the founding partner told me there’s never been a harder time to raise as an emerging manager,” Jonathan Hollis, managing partner at Mountside Ventures in London, told VCJ recently.
But help is on the way.
This week, Mountside, one of Europe’s leading accelerators and early-stage advisory firms, began accepting applications for the region’s first VC fund accelerator program, designed to give emerging venture fund managers more access to capital from limited partners. Applications will close in early December, and the first cohort will start at the end of January 2025.
The program will last three months, occupying one to two days every two weeks, to be followed by LP matchmaking events once a month until the summer. Mountside, working alongside Berlin-based fund of funds investor Blue Future Partners, will select 15 to 20 fund managers across Europe who are trying to raise their first, second or third fund.
The program is open to specialist or generalist funds and is completely free, so as “to avoid selection bias and level the playing field for underrepresented managers who could otherwise be excluded,” Mountside said in a statement.
“When we looked at the landscape in Europe, we could see this huge desert compared to the US,” Gregor van dem Kresebeck, managing partner at Blue Future Partners, which has supported many emerging fund managers, tells VCJ.
While emerging VCs in Europe are skilled investors, they don’t know how to fundraise like their US peers, he notes. “As a fund of funds, we saw this is the main thing they were missing,” he says. “If we want to do something for the ecosystem, we need to improve that skill, and it’s a skill that can be taught” in a relatively brief accelerator program.
There have been US efforts to foster more emerging managers in VC like one based on a GP staking model, launched last December by Coolwater Capital in partnership with Versatile VC, which VCJ previously wrote about. But until now, VC accelerator programs in Europe have been geared to founders, not fund managers.
In addition to the bi-monthly workshops, Mountside’s program provides at least 10 hours of one-on-one coaching to participating fund managers from VC mentors. These include Robin Klein at LocalGlobe, Haakon Overli at Dawn Capital, Hussein Kanji at Hoxton Ventures and Sitar Teli at Connect Ventures.
Besides Knesebeck at Blue Future, LPs volunteering to mentor program participants include Christian Stiebner at KfW, a German government-affiliated bank, Charlotte Palmer at Integra Global Advisors, and Dominic Maier at AXA Venture Partners.
Mountside also hopes to support the “Mansion House reforms” announced in July 2023 by the UK’s Chancellor of the Exchequer, Jeremy Hunt, which aim to boost pensions and increase investment in British businesses. Among the reforms is support for an agreement between nine of the UK’s largest defined contribution pension providers – representing more than £400 billion in assets – committing them to allocating 5 percent of the assets in their default funds to unlisted equities by 2030.
Due to concerns over fees and liquidity, very few pension funds currently allocate to either private equity or venture funds, making family offices and fund of funds the dominant LPs in this asset class, says Hollis. “We’re looking to engage all types of LPs on this program.”
Although the program will accept only 15-20 funds, Mountside plans to provide free resources digitally to each of the 300 to 400 applicants that submit their information, he adds.
“An example could be a perfect template for a VC pitch deck,” Hollis notes. “There isn’t really any online. Same thing with a financial model for a fund to use. Same thing for investor lists.
“There’s a real vacuum of support, especially for European funds, on the very basic levels of information. What’s ironic is that founders have all of this information easily accessible, yet raising a VC fund is a lot harder than raising a round of funding as a tech start-up.”
Fundraising by venture capital funds in Europe has historically lagged that in the US and Asia. In the third quarter, funds investing in Europe accounted for just 13 percent of total fundraising and ranked fourth among geographic regions, behind North America, multi-regions and Asia, as Venture Capital Journal reported last week.
Although that data doesn’t represent the level of capital raised by fund managers based in Europe, it still speaks to the comparative weakness of Europe’s VC fundraising engine. In June, Sifted reported that 40 European first-time venture funds had announced a first or second close in 2023, down from 60 in 2022.
If fundraising has been tougher for venture funds in general in Europe, the challenges are all the more daunting for emerging managers, most of whom lack track records of successful exits and returns that LPs are more focused on now.
“[In] the conversation I had yesterday with one of the largest French VCs that’s been around for 25 years, the founding partner told me there’s never been a harder time to raise as an emerging manager,” Jonathan Hollis, managing partner at Mountside Ventures in London, told VCJ recently.
But help is on the way.
This week, Mountside, one of Europe’s leading accelerators and early-stage advisory firms, began accepting applications for the region’s first VC fund accelerator program, designed to give emerging venture fund managers more access to capital from limited partners. Applications will close in early December, and the first cohort will start at the end of January 2025.
The program will last three months, occupying one to two days every two weeks, to be followed by LP matchmaking events once a month until the summer. Mountside, working alongside Berlin-based fund of funds investor Blue Future Partners, will select 15 to 20 fund managers across Europe who are trying to raise their first, second or third fund.
The program is open to specialist or generalist funds and is completely free, so as “to avoid selection bias and level the playing field for underrepresented managers who could otherwise be excluded,” Mountside said in a statement.
“When we looked at the landscape in Europe, we could see this huge desert compared to the US,” Gregor van dem Kresebeck, managing partner at Blue Future Partners, which has supported many emerging fund managers, tells VCJ.
While emerging VCs in Europe are skilled investors, they don’t know how to fundraise like their US peers, he notes. “As a fund of funds, we saw this is the main thing they were missing,” he says. “If we want to do something for the ecosystem, we need to improve that skill, and it’s a skill that can be taught” in a relatively brief accelerator program.
There have been US efforts to foster more emerging managers in VC like one based on a GP staking model, launched last December by Coolwater Capital in partnership with Versatile VC, which VCJ previously wrote about. But until now, VC accelerator programs in Europe have been geared to founders, not fund managers.
In addition to the bi-monthly workshops, Mountside’s program provides at least 10 hours of one-on-one coaching to participating fund managers from VC mentors. These include Robin Klein at LocalGlobe, Haakon Overli at Dawn Capital, Hussein Kanji at Hoxton Ventures and Sitar Teli at Connect Ventures.
Besides Knesebeck at Blue Future, LPs volunteering to mentor program participants include Christian Stiebner at KfW, a German government-affiliated bank, Charlotte Palmer at Integra Global Advisors, and Dominic Maier at AXA Venture Partners.
Mountside also hopes to support the “Mansion House reforms” announced in July 2023 by the UK’s Chancellor of the Exchequer, Jeremy Hunt, which aim to boost pensions and increase investment in British businesses. Among the reforms is support for an agreement between nine of the UK’s largest defined contribution pension providers – representing more than £400 billion in assets – committing them to allocating 5 percent of the assets in their default funds to unlisted equities by 2030.
Due to concerns over fees and liquidity, very few pension funds currently allocate to either private equity or venture funds, making family offices and fund of funds the dominant LPs in this asset class, says Hollis. “We’re looking to engage all types of LPs on this program.”
Although the program will accept only 15-20 funds, Mountside plans to provide free resources digitally to each of the 300 to 400 applicants that submit their information, he adds.
“An example could be a perfect template for a VC pitch deck,” Hollis notes. “There isn’t really any online. Same thing with a financial model for a fund to use. Same thing for investor lists.
“There’s a real vacuum of support, especially for European funds, on the very basic levels of information. What’s ironic is that founders have all of this information easily accessible, yet raising a VC fund is a lot harder than raising a round of funding as a tech start-up.”
