From its roots in the private equity world of the 1980s, venture capital in Europe has always operated somewhat differently from its counterparts in the U.S.
In this episode of the 20 Minute VC, we catch up with James Wise, a longtime contributor who is making his bow with us as Balderton Capital’s youngest early stage venture partner, and who has plenty to say about how venture capital in Europe needs to evolve.
Of the 500 funds operating across Europe today, Wise says many of them still think like the private equity firms from which they sprang. An approach, he says, that’s ill-suited to venture’s early stage risk-taking.
The financial modeling at the heart of a financier’s skillset in private equity or banking can’t be applied to nascent companies that are little more than an idea.
Rather, Wise argues that venture firms across Europe need to create a more diverse team if they’re going to be successful company builders and partners with the entrepreneurs they back.
Wise also argues for diversity in a fund’s investment strategy as well as its personnel. While individual investors may specialize in a particular segment, a fund needs to be broadly diversified, says Wise. It’s an insight that flies in the face of the recent fragmentation of the venture business in the U.S. and Europe where firms are segmenting themselves by stage, geography, and industry.