Founder To Investor: Europe Is Bridging The Gap Between Startups & VC

First the U.S., and now also Europe: the startup founder turned influential investor is a new specter haunting the West. The trend began with the so-called “PayPal Mafia”, the gang of entrepreneurs including Elon Musk and Peter Thiel who left PayPal when it was acquired by eBay and who went on to raise untold fortunes by investing in Facebook, LinkedIn, YouTube and others, launching other globally famous and highly lucrative businesses in the process.

From Founders To Investors

A similar feat was replicated in Europe when Estonia’s Skype was likewise sold to eBay, and many of Skype’s luminaries also went on to become investors in their own right. In part because of their location in Europe, these entrepreneurs had less investment and immediate renown to bank on than their U.S. counterparts, and therefore turned to investment to fill the equity gap and raise venture capital, while launching alternative ventures.

Skype’s Niklas Zennström, for example, went on to found the tech-based VC firm Atomico (source of a recent, highly touted report on the state of European tech). Other ex-Skypers in Tallinn have founded Fleep, a platform-agnostic office messaging service designed to supersede traditional email and integrate sharing-platforms on a single tool, a “Skype instant messenger on steroids” whose “long-success depends… on how well it will fare against email services, rather than against other IM clients.”

User Growth And Renown

Fleep’s 2015 revenue is projected at €100,000 but the company is banking on user growth to spur revenue, a business model echoed by other startups across Europe. Austria’s StartUs, for instance, the one stop-shop for the startup community, has become the biggest career network for Entrepreneurs and Startups in Europe over a year and a half of existence with 25,000 + monthly unique users.

Europe may be at a relative investment disadvantage in terms of a company’s media or cultural renown, but this deficit might be corrected by the increasing need for companies to launch on an international scale by, among other things, focusing on user growth. The greater the user growth, the greater chances may be of being considered by the new pan-European SpeedInvest initiative.

Europe’s Largest VC Fund

SpeedInvest, by far the most lucrative early-stage venture fund in Europe which began its investment activity in March 2015, had collected €90 million euros in investment by the end of the year. Founded by Olive Holle, founder of SYSIS, the 18-member SpeedInvest team is divided between Vienna, Munich and San Francisco, and is succeeding in uniting a squad of top-class investors from the private sector. By May, SpeedInvest was able to announce its entry into New Enterprise Associates (NEA), the largest VC fund in the world involved, inter alia, with Salesforce, Cloudfare and Uber. NEA directly invested €5 million into the SpeedInvest fund and reserved another €50 million to expand financing to the top startups in the SpeedInvest portfolio.

Having already invested in 14 startup projects in 2015, these also comprise something of a “Who’s Who” of the Austrian startup scene, including Shpock’s founding team of Katharina Berger and Klaus Armin Strbac, who were themselves part of the original SpeedInvest portfolio until the sale of their startup. SpeedInvest focuses on financial and digital core technologies (“Deep Tech”), alongside selected digital businesses models in E-commerce and media. Its emphasis will be on the “seed phase” of startups in the Central European region, with new yearly investments averaging €500,000, as well as up to €3 million earmarked to bridge the financing gap for later-stage startups and also establishing a platform for quicker and smaller (€20,000-100,000) investments.

Such developments reflect a growing trend of successful Founders in Europe wanting to return the favor of their own pioneering successes by further bridging the European gap between ideas and investment, and encouragingly point towards a reversal of the negative norm of institutional fragmentation towards a more integrated fusion of the European ecosystem.

 

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