In his latest edition of his survey on venture capital sentiment among 107 European investors, Chausson summarized some positive news for the founders: European venture capitalists are back after the ups and downs of the post-Covid environment. But with the vital warning that everything has been replaced in the procedure and that situations are less biased in favor of the founders than in the last decade.
Almost the entire budget now says they are open to new transactions, which is a refreshing replacement after things froze a little in March and April, when partners faced portfolio emergencies and waited differently to see what the world would look like in a few months In particular, one hundred percent of respondents in the UK said they accepted a new offer. The speed of investment is also increasing, with an average budget of about five weeks between transactions, which is likely to be quite close to the frantic speed observed in 2019.
That said, the objectives have been replaced during this period. A slight majority of investors in general said they had replaced the characteristics with those that value the founders; it’s not surprising, however, endurance and agility were the two main points that stood out.
On the economic front, the top investors reported that two months of restored profit expansion provided them with sufficient convenience in terms of a company’s ability to safeguard. Therefore, depending on the effects of locks in various countries, many corporations deserve to be already on their way to their past trajectories. However, some corporations experiencing seasonal herbal slowdowns during the summer may have more difficulty demonstrating this kind of expanding recovery and may stay out until seasonality resumes.
What worries many founders most is that the replenishment in the evaluation criteria means that more VCs are looking for profitability much earlier. It is complicated even in smart times with new companies, so it remains one of the biggest systemic upheavals that amateur founders will face, as expansion occurs at the expense of profitability (in the short term). U.S. investors have a tendency to have a more beneficial view in this direction and, in fact, this is a fear for European founders who cannot seamlessly access the U.S. financing market position. company activity.
He is also concerned about the founders that several venture capitalists have begun to use sliced equity circulars as a way to reduce investor risk. This has perverse effects on companies because even when a circular is closed, founders will have to worry about crossing milestones to actually get all the capital, which can create a downward spiral of making short-term suboptimal options possible at the expense of more time. price creation deadline. Investment. For example, the founders would possibly decide to reduce burns by postponing the hiring of key executives who would eventually produce an external price for the company. This is unfortunate and, in fact, it is a negative trend to see in Europe compared to the United States, where sliced tours are much less unusual in maximum fundraisers.
European founders deserve to be wary of terms with more punitive measures, such as milestone-based tranches. Regardless of the market sentiment, the global start of new businesses is primarily about generating exceptional expansion, so measures that lead to a slightly larger balance at the expense of expansion create a curse for the founders at the next fundraiser. Anything that distracts from expansion becomes problematic, because then hang out again on the next financial circular. If those investors don’t see exceptional expansion, it becomes much harder to reach the next capital increase, so today’s measures can keep a business afloat, but simply “kick” to a deeper upheaval in 12-18 months.
I co-founded Hoxton Ventures, an early-stage European venture capital company founded in London. Prior to that, in the past he was a computer scientist, working at Google and Intel, among others, in
I co-founded Hoxton Ventures, an early-stage European venture capital company founded in London. Before that, in the past I was a computer scientist, working at Google and Intel, among others in Silicon Valley for the first ten years of my career.