Betterfront, in collaboration with Allocate*, analyzed 100 pitch decks from emerging VCs, gaining a brief but detailed insight into the profile of European emerging venture managers. Below is a summary of the key findings.
01
FUNDS IN MARKET
Emerging managers in Europe represent more than GBP 3.1B in funds in the market. After an average of 10 months of fundraising duration, 28% of the combined fund sizes were committed. Most GPs (42%) have a target fund size between GBP 50-99m.
02
FIRST-TIME FUNDS
As expected, the majority (44%) of the European managers are first-time managers, while another 42% have already 1 fund in their track record.
03
GEOGRAPHY & SECTOR FOCUSES
London is by far the #1 hub for VCs, with 20% of the 100 GPs operating out of the British capital. Overall, 94% of VCs invest across both Europe and the UK. 87% of emerging managers decide to be sector-focused rather than generalist investors. Unsurprisingly, the top 3 sectors are AI/ML, Fintech, and Deeptech while Edtech ranked #4.
04
VC INVESTMENTS & TEAM SIZE
The European VC landscape is mainly characterized by early-stage investment, with more than 50% investing at the seed phase while only a limited percentage is engaged in the later stage (<5%). As a result, management teams are small and entrepreneurial with a third of the team counting between 3 to 5 investment professionals.
05
NET IRR TARGET & FEE MODEL
While it is always difficult to predict future performance, two-thirds of emerging managers aim to generate between 20% and 39% net IRRs. To produce those results, 73% of them will charge the standard 2/20 fee model.
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All data are as of November 2020.
