The increased attraction of foreign capital can largely be explained by European startups’ higher capital efficiency and lower entry valuations, compared to their US counterparts.
btov has always invested more globally than you may think — 18.5% of btov Fund I’s investments were in fact located outside of Europe.
However, we only opportunistically invest outside of our European comfort zone i.e. through our trusted network and associated btov discovery weeks out of which investments such as OrCam, Flytrex (both Israel), Vitta (Brazil) and Happify (US) emerged.
Going forward, we will further systematise our network-led investment strategy through the ongoing Europeanisation of btov’s super angel network. We have already expanded our originally DACH-focused angel investor network group to Southern Europe (through Luis Cabiedes), BeNeLux (through Toon Coppens), CEE as well as the Nordics. Stay tuned. There is more to come.
7. On top of mandatory financial performance, there is an increasing importance of VC’s non-financial differentiation
We are contemporary witnesses of a shift away from PE-like financial (mostly revolving around valuations) towards non-financial differentiation. In our industry, non-financial differentiation stands for:
- “Smart money”, composed of domain and operational expertise, one’s network and integrity
- Communicating these characteristics with the public, and converting them into a differentiated brand (this only really started in with the formation of Point Nine and Project A, at least in Germany)
These days, founders are to a greater extent pricing in this signalling effect of certain investors.
In light of our long-lasting hesitation to share content as well as our past rather mediocre web presence, it is fair to say that branding hasn’t been btov’s strength — hence why we took the liberty to renew our web appearance (check out our new website here and our most recent blog posts here).
8. Sourcing channels remain largely the same, with two exceptions
Sourcing remains largely network-driven. This is confirmed by the latest trend towards network-driven funds (check out our recent post on supporting entrepreneurs by connecting Brains to Ventures hinting to the evolution of btov’s angel network). At btov, >50% of investments originate from the btov Private Investor Network, including the likes of DeepL, Raisin, SumUp, foodspring and Seven Senders. This very much underlines the essence of network-driven sourcing. However, as indicated above, there are two exceptions:
Exception 1: Students are becoming an integral part of our ecosystem. Founder recruiting occurs earlier and earlier with an increasing presence at universities. Many funds are closely tied to top tier business schools or technical universities. Examples include GFC and Cherry with WHU or btov with HSG and ETH. The same applies to VC relationships with student-run conferences e.g. Atomico with Slush and btov with START Global, among many others. The emergence of student-run pre-seed funds such as First Momentum Ventures, Creator Fund or Wave Ventures confirms this argument.
Exception 2: Last but not least, tech-enabled sourcing is on the rise. Thanks to a multitude of relevant info sources, ranging from LinkedIn to App Store Analytics to the commercial register, VCs increasingly extend their sourcing arm beyond their inherently limited network. Prominent examples include e.ventures (Thedailygieselmann — reminds me of my first VC internship 2013), EQT Ventures (Motherbrain), Inreach Ventures or Correlation VC.
— — —
It is only a matter of time when emerging tech giants such as Adyen, Zalando or Spotify close in on SAP as the long-standing most valuable tech company with European roots. As the graph below suggests, the candidate list for the next SAPs is long and yet continues to dramatically increase in size.