Last month, at the same time as London-based venture capital firm Felix Capital announced it was closing its fourth and newest fund with $600 million in capital commitments, we had a separate conversation with Felix founder Frederic Court about how competition is going in Europe. has changed as so many US venture firms have opened offices on the continent, including Sequoia Capital, Lightspeed Venture Partners, Bessemer Venture Partners and General Catalyst.
Unsurprisingly, Court said the wide range of options is great for founders. He also told us that most European investors prefer to stay with European companies or start their own stores where they can have more influence. We thought it was an interesting part of a longer discussion† the snippets below have been edited for length.
TC: Many of the largest US companies have settled in Europe in the past 18 months. How does all this interest affect your work on site?
FC: We already know many of these companies well. They hire people who are already investors in Europe from other others [venture] platforms. And overall it’s great for the entrepreneurs in Europe [and] a reflection of the evolution of the market.
Here we have seen more ambition, more talent and of course more capital in recent years as Europe started to build not only local champions but also world champions like Spotify and Adyen and Farfetch, which I was involved with from the start. day one as an investor. So yes, there is more competition, but there are also more options for founders.
You mention these firms hiring from other platforms, although I read somewhere that they had problems hiring because there are not enough investors with general partner level experience in Europe and also because the mindset is different from US VCs who – until very recently – were focused on growth, while European VCs were more focused on risk elimination. Do any of those things work for you?
I think a lot of this is true. The reality is that we are in an industry where it takes time to measure success. I mean, I’ve been in venture capital for over 20 years. There aren’t many of us. There’s Fred [Destin] who started Stride.VC and [investors at] Accel and Index who have been in this space for over 20 years and have a great track record, but it is quite a small community. So there’s a lot of great emerging talent, but with fewer data points for success, and as a result, it’s probably been harder for people to hire.
I think there is probably also a feeling from many of the investors in Europe [that] they don’t necessarily wait to be hired by US firms. They really want to build local businesses. When we launched Felix [in 2015] we found tremendous support from friends in the US who put us in touch with [limited partners] because when I started I had zero LP connections. But we also found a lot of local support from people who wanted to nurture local co-investors with whom they could work well. So it’s not necessarily a matter of course for a European investor to suddenly join a team that is new and where decisions will be mostly made in the US. [compared with the opportunity they have to] be part of European platforms and have more influence.
I have no doubt that many people on our team are called. We talk about it quite openly. Honestly, the hardest part about running a venture business is team building. [But] we have a certain way of doing things; we are very much a culture of ‘we’ versus ‘me. We have some great people who joined our company and then moved on with great success, but the people who have stayed and the people who have recently joined are very attracted to this team culture. We choose our battles together, we win them together and we lose them together. And that’s very much a culture that I wanted from the start. Even our fundraising is done in a very open way, with the list of all our investors available for the [entire] team. We don’t feel like we have to be secretive there.
You say there is complete transparency in your LP base across the company. Are you trying to make it clear that other companies might be more careful with this, since so many people have started to set up their own businesses?
LP relationships are typically something completely shielded from the rest of the team [but] we have been very open with our investors by putting them in touch with different team members to get to know them and also to confirm what i just described: that we work in a transparent way and make decisions together.
Personally, it’s also part of the business that I came across quite late, and I wish I had [been exposed] earlier. It’s a very important part [of being a VC] there’s not much talk about it. If you join some of the big companies you mentioned, a lot of the partners or investors won’t get involved in fundraising right away because those companies are like fundraising machines [based on] very strong past performance. If you’re starting from scratch, the first six months to a year to two years is often focused on fundraising, so it’s an important skill set and we want our LPs to know the team and vice versa. It is a choice to do it this way.