E370 | EUVC | UK VC Fundraising, Corporate Climate Pullback, EU Fragmentation, and Pan-European Startup Entity – hosted by Dan Bowyer
Oct 18, 2024
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In this engaging conversation, Mads Jensen, Partner at SuperSeed, shares his expertise on the evolving landscape of European tech and venture capital. He discusses the rising UK VCs amidst global fundraising challenges and highlights the pressing need for collaborative strategies to tackle climate initiatives. The duo also tackles EU fragmentation and its implications for the startup ecosystem, while exploring the delicate balance between innovation in space tech and environmental responsibility. Jensen emphasizes a proactive approach to drive decarbonization and investment.
UK VC fundraising is thriving with over $12 billion expected this year, reflecting resilience in a mixed global landscape.
Corporate retreat from climate initiatives is evident, yet investment shifts towards nuclear and battery storage signal a maturation in energy solutions.
Deep dives
UK Venture Capital Trends
UK-based venture capitalists are expected to raise over $12 billion this year, surpassing the previous record of $11.5 billion in 2021. Despite global fundraising figures not recovering to 2019 levels, the UK venture landscape appears resilient, with fewer but larger funds being raised, leading to an average fund size of $170 million. Notably, major funds like Norwest and Arch are primarily focusing on late-stage investments rather than traditional venture backing. This trend suggests that while the UK shines amid a mixed global picture, the venture capital community is arguably moving towards larger, established names, as they typically attract more significant investments.
Shifting Dynamics in Climate Investment
Recent patterns show that large companies are scaling back their engagement in climate initiatives, as evidenced by some CEOs skipping COP29 and investment in climate tech predicted to drop by 20% in 2024. Investment tools designed for ESG tracking have also experienced decreased demand, reverting growth rates to 2017 levels. Despite this cooling off in climate tech focus, there remains a potential silver lining, as companies are increasingly investing in energy sources like nuclear power and advanced battery storage technology. This shift may indicate a maturation in climate action from mere signaling to tangible solutions in energy generation.
UK International Investment Summit Outcomes
The UK International Investment Summit recently announced a substantial $63 billion in private sector investment pledges, but controversy arose when DP World pulled back on a planned $1 billion investment in Essex, sparking questions about the government's investment stability narrative. Labor leader Keir Starmer stresses a need for stability and less regulation, yet struggles to balance these calls with the demands from within the party for robust public service funding. As the party navigates upcoming budget announcements, a focus on infrastructure investment, particularly in key sectors, is critical for achieving economic growth. With shifting political dynamics, it remains to be seen if the government can effectively attract the necessary international investments while managing internal party factions.
Exits and Liquidity in Venture Capital
The venture capital market is facing challenges with a significant lack of exits, restricting new deal activities, evidenced by a 34% drop in USBC investments over a recent quarter. The impact of decreased active investor participation and external regulatory pressures are contributing factors to this trend, leading many LPs to hesitate before committing to new funds. However, with increased liquidity expected as interest rates stabilize and policy conditions become more favorable, there is optimism for a market turnaround in the next 12 to 24 months. As exit strategies become clearer, the readiness of funds to adapt to changing landscapes will be crucial for restoring confidence in venture capital investments.
Welcome to a new episode of the EUVC podcast, where our good friends Dan Bowyer and Mads Jensen from SuperSeed cover recent news and movements in the European tech landscape 💬
Go to eu.vc to read the core take-aways.
Chapters:
01:11 UK VCs on the Rise 02:41 Global VC Fundraising Trends 03:45 Big Names in Fundraising 06:40 Climate Tech and COP 29 11:06 UK International Investment Summit 13:06 Labour's Economic Strategy 16:35 Public Sector Investment Insights 20:07 National Wealth Fund Discussion 22:07 Investment and Planning Challenges 22:54 Exploring the Future of the European Union 23:30 Macron's Warning and the EU's Productivity Challenge 24:45 The German Automotive Industry's Struggles 25:37 The Rise of Electric Vehicles in China 25:54 Protectionism and the European Export Engine 28:09 The EU's Startup Ecosystem Initiative 30:05 SpaceX's Technological Feats 32:48 Balancing Space Exploration and Climate Change 33:47 The Future of Energy and Innovation 36:42 Venture Capital and Market Liquidity Challenges
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