Editorial: The VC industry is booming
Posted on 22 August, 2016 by James Mawson, editor-in-chief
As figures reveal 811 European firms participated in 2680 deals since early 2015, Cambridge has raised a $90m fund and the Chinese government is aiming for a $30bn vehicle.
There is little question the venture market is becoming larger but also more diverse.
Since the start of last year, 811 European VCs have participated in at least one of the 2,680 venture deals completed across the continent, according to our data partner, PitchBook, which noted that globally VC fundraising hit a record in the second quarter.
However, more than half of its top 10 since the beginning of 2015 are state-run investors (name with their investment counts in brackets):
1. High-Tech Gründerfonds (76)
2. Bpifrance (67)
3. Finnvera (62)
4. Kima Ventures (55)
5. Almi Invest (49)
6. London Co-Investment Fund (44)
6. Funding London (44)
8. Index Ventures (36)
8. Scottish Enterprise (32)
10. SEED Capital Denmark (31)
10. LocalGlobe (31)
But even while the numbers of deals seem large, Europe is dwarfed by China’s state plans.
China has just reportedly approved the establishment of a state-owned $30bn VC fund in Shenzhen, according to the local news publication Economic Observer.
The fund will launch with an initial $15bn to back technological innovation, according to the Observer’s report.
The new fund would make up less than 10% of China’s government venturing programme. China holds $336.4bn for investing in the nation’s startups at the end of 2015, according to data from Beijing-based VC Zero2IPO. Zero2IPO said this had tripled since 2013 and was made up of 780 government guidance funds, according to Bloomberg in its analysis of the Chinese report.
And it is a model others are copying, with Indian state-owned petroleum producer Oil and Natural Gas Corporation (ONGC) set to drill into startups with $15m fund, as reported last Monday by our sister publication Global Corporate Venturing.
ONGC will invest in innovative seed-stage startups and also provide mentoring and resources.
Funds are increasingly diverse in their stakeholders across the so-called triple helix of governments, universities and corporations.
In the UK, Cambridge Innovation Capital (CIC), a university venturing fund that commercialises science and technology advances made at Cambridge University, has raised £75m ($90m).
New investors include hedge fund Winton Ventures, the state of Oman's Investment Fund and fund manager Woodford Investment Management. Cambridge University will remain the largest shareholder in CIC, owning about a third of the firm. The money tops up the original £50m investment from chip maker ARM and hedge fund Lansdowne Partners.
CIC has invested £33m in 13 technology startups in and around the Cambridge area. Victor Christou, CEO of CIC, said: “Since the inception of CIC and its initial fundraising in 2013, the company has made significant progress within the Cambridge cluster, one of the richest seams of scientific and technological innovation in the world. This additional capital will enable CIC to continue to support exciting [intellectual property] IP-rich companies and we look forward to continuing to work very closely with the University of Cambridge and our network within the Cambridge area.”
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