In accordance with Salesforce VC, distant “stage taking part in discipline” for European startups searching for funding
Nikolay Storonsky, CEO of Revolut, speaks on stage at the TechCrunch Disrupt conference in San Francisco, California.
Kimberly White | Getty Images
LONDON – Silicon Valley venture capitalists have accelerated the growth of businesses on their doorstep for decades, but the coronavirus pandemic is making these tech investors more global, according to Alex Kayyal, head of Salesforce Ventures International.
Speaking to CNBC on Wednesday, Kayyal said it doesn't matter where startups and VC firms are in relation to each other as everyone is looking for cash from afar. "In many ways, because we are all far away, the playing field is leveled," he said on a Zoom call.
Before Covid-19 hit, European start-up founders often had to fly to California and visit the VC firms on Sand Hill Road in order to raise a large round of funding because that is where most of the world's venture capital is located.
On site, entrepreneurs like London, Paris and Berlin would have to try to convince VCs in the valley that they deserve to be supported in front of US start-ups, which, according to Kayyal, is anything but easy. If you were a European founder you would be "always at a disadvantage in many ways," he said.
But that has now changed. Today, for a Valley-based investor, it makes no difference whether "a business is 30 minutes away … or an eight-hour flight away," continued Kayyal.
While Kayyal is based in London himself, he said Salesforce Ventures has invested in companies around the world that it hasn't really hit. "It's all through zoom," he said.
What the numbers say
Data released Thursday by VC analytics firm Dealroom shows that European startups raised more than € 2 billion ($ 2.3 billion) more from US investors between January and October this year than in the same period last year . Investments rose from 98.1 billion euros in 2019 to 100.6 billion euros in 2020.
While things are far from perfect for all European startups, hardly a week has passed in the pandemic without at least one well-known company on the continent announcing that there was a big round under the leadership of the US Investors.
The Berlin travel company GetYourGuide announced on Thursday that it had raised 113 million euros from investors in a new financing round led by the US group Searchlight Capital Partners. London-based fintech app Revolut raised $ 80 million from TSG Consumer Partners, a San Francisco-based private equity firm, in July.
However, Europe is still lacking a technology company worth hundreds of billions of dollars. In the US there are several companies like Alphabet, Apple and Microsoft that have even reached a market capitalization of trillion dollars. Meanwhile, China has big companies like Alibaba and Huawei.
The pandemic is not just affecting access to finance. According to Kayyal, who pointed out that startups are less focused on recruiting in the countries they are based in, the playing field has also improved in terms of access to talent.
Andy McLoughlin, a UK venture capital investor with Uncork Capital in San Francisco, told CNBC that his firm had backed several companies with European founders who worked in their country of birth while the US is under lockdown.
"These are US-based companies, but many of their employees work outside of the US," said McLoughlin. "The question arises what a headquarters mean today, given the distribution of people in recent months."