Earlybird Venture Capital today issued “Turning Venture Capital into Wisdom: Why returns in Europe are now outpacing the U.S.,” a 40-page report demonstrating that European venture capital funds have actually generated comparable or better returns than their U.S. counterparts over the period of the last two years. The report is released amid fevered debate that has taken place regarding the venture capital returns secured in Europe vs. the United States, as well as the spirit of entrepreneurism in both regions.
Earlybird Venture Capital analyzed data from the European Venture Capital Association (EVCA), Dow Jones VentureSource and its own internal fund to come to the finding that, despite the ongoing dampened perception of European venture capital, the last 24 months have seen a better quality of returns for European VCs than for their U.S. counterparts. The report suggests that, after 20 years playing catch-up to the U.S., European venture capital truly has reached an inflection point, with better real performance among key indicators for the first time in history.
Some of those key indicators include:
• Proportionally, Europe venture capital is now producing higher exit multiples than U.S. venture capital, as well as higher capital efficiency.
• Europe has seen some $15 billion in venture-backed liquidity events during the past two years. This represents half of the $30 billion in U.S. venture-backed liquidity events during the same period, yet occurring with only one fifth of the venture funding.
• Since 2005 there have been an impressive 14 venture-backed exits of European start-ups larger than $1 billion – among them Luxembourg’s Skype, Swedish open source company mySQL, British sports betting platform Betfair and German online mortgage broker Interhyp.
• European VC-backed pre-and post-IPO performance also now matches or exceeds that of U.S. counterparts, while a higher share of European VC funds demonstrate top U.S. quartile performance.
Earlybird Europe Venture Capital Report
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Thanks a lot for this interesting report. However, as a German VC seeking biotech the results are also somewhat depressing but hopefully refresh the interest in European start-ups. From a personal point of view I would guess that specifically for seed and start-up investments the US vs EU difference might be even more extreme.