London-based Balderton Capital has announced the closure of two new funds: a €560 million Early Stage Fund IX and a €621 million Growth Fund II. This combined €1.18 billion represents Europe's largest venture funding focused exclusively on the region's start-ups.
This substantial raise reflects the growing appeal of European tech, as indicated by managing partner Bernard Liautaud. He cited data demonstrating superior performance of European venture capital funds compared to their North American counterparts over the past 10-15 years. Liautaud also emphasised the increasing number of globally successful companies emerging from Europe.
The fundraise comes at a time of heightened activity in the European venture capital scene, with several top firms securing new capital this year. Despite a dip in overall global VC funding, investment in European tech companies actually rose by 12% in the second quarter year-on-year.
Balderton has a notable track record, having been an early and major investor in Revolut, which recently reached a €40 billion valuation. The firm's focus remains exclusively on European start-ups, differentiating it from other large VC firms that also invest in the US.
While this European focus has meant missing out on investments in foundational AI companies based in Silicon Valley, Balderton sees significant opportunities in AI applications built on top of existing infrastructure. The firm acknowledges the risk of slower-than-expected commercial adoption of these applications but remains optimistic about their potential to transform various sectors.
The fundraising also highlights a shift in the exit landscape for European start-ups. The IPO market has become more challenging, with companies now needing to be significantly larger to go public. However, mergers and acquisitions activity has increased, providing alternative exit opportunities for investors and entrepreneurs.
Overall, Balderton's successful fundraise signals a positive outlook for the European tech ecosystem. It demonstrates growing investor confidence in the region's potential and highlights the abundance of promising start-ups emerging from Europe.
