London-based venture capital firm Balderton Capital has raised $400 million for its seventh investment fund to back Europe’s tech startups.
The fund will focus on early, Series A funding for enterprise software companies, health tech, and “deep-tech” such as artificial intelligence, according to Bloomberg.
Earlier Balderton funds concentrated on financial technology and other areas, but the firm has been shifting its focus to health tech and life science, in which big data analysis and other digital technologies have been driving innovation.
The new early-stage investment fund is among the largest in Europe, where venture capital financing overall is expected to reach a record level this year. During the first three-quarters of 2019, investment reached $28.1 billion, outstripping investment for all of last year.
Balderton partner Lars Fjeldsoe-Nielsen said:
“The key word is momentum. Europe is growing so fast on the tech scene as well right now that we will have to spin the hamster wheel faster to stay on top of it.”
The firm says the number of annual Series A rounds in Europe has quadrupled since 2012. Balderton was named the most active Series A investor in Europe between 2014 and 2018, in a recent report from Dealroom. They’ve raised a total of $3 billion, across eight funds, for European tech companies.
Fjeldsoe-Nielsen, a former Uber executive, suggests that Europe is now beginning to catch up with the US tech sector, and could soon produce a tech giant able to rival those of Silicon Valley.
A report last year by VC firm Atomico showed there were twice as many initial public offerings in Europe as in the US, and suggested they were performing better as well.
Fjeldsoe-Nielsen said that European tech companies have lower valuations than US firms, but noted that this stems from “considerably lower” housing and hiring costs, which have actually made Europe more attractive for investors globally.
“We’re actually seeing a lot of US funds doing investments in Europe as well, because the tech talent is on par with what we’re seeing in the US,” he said.
Balderton already has a stake in companies like Sophia Genetics and Revolut, a UK financial technology company that Fjeldsoe-Nielsen says is gaining steam to compete with firms from the US and China. Their next funding round could push Revolut’s value as high as $10 billion.
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