The famend VC firm Silicon Valley is in search of success tales for start-ups in Europe
Michael Moritz, partner at Sequoia Capital
Scott Mlyn | CNBC
LONDON – Sequoia Capital, one of the premier venture capital firms on Sand Hill Road in Menlo Park in Silicon Valley, has made an important new bet on what they think will be the hottest next: Europe.
Founded 48 years ago by Don Valentine and with early support from Apple and Google, the renowned company is ready to sign a lease for a new office in London in the next few weeks to accommodate a small but growing team of European investors.
"When we're physically there … we can move faster … and dramatically increase the effort," veteran Sequoia partner Matt Miller told CNBC on Monday in a video call. "I came (to London) for a week a month but there is only so much to see and do. We felt it would make a huge difference to our ability to find opportunities earlier when we are there."
There are now several European tech firms valued at more than $ 10 billion, and Miller believes people are starting to wonder when a $ 100 billion startup will be born in Europe.
Sequoia's US team has already invested hundreds of millions in European startups, including AI chip maker Graphcore, fintech company Klarna, flight finder Skyscanner, online makeup retailer Charlotte Tilbury, life science Cambridge Epigenetix and security company Tessian. But worries that some of the most promising startups may slip through the web in cities like London, Paris, Berlin and Stockholm – Sequoia has missed startups like the AI lab DeepMind, which sold for $ 600 million in 2014 Google was sold, and chip designer Arm, which is currently being sold to Nvidia for $ 40 billion.
Miller hesitated to say exactly where the new London office would be if it failed. He confirmed, however, that it won't be in Mayfair – the swanky London neighborhood where several other VC firms including Index Ventures and Accel were founded – as this isn't the "vibe" the company is looking for. "I don't want to share specifics, but it's a great neighborhood that we think is a great destination for founders to hang out with," he said.
After years of rumors, Sequoia's official arrival in Europe is seen in some corners as a big deal for the continent's tech scene. Alex Kayyal, a London-based Salesforce Ventures International partner, told CNBC that Sequoia is "one of the most respected venture firms in the world." The fact that the company is officially established in Europe "can only be an endorsement here for entrepreneurs," he said.
Sequoia didn't say how much it plans to invest in Europe and, unlike many other companies, it doesn't reveal how many billions it manages.
So far, the Sequoia team in London consists of just four people: Miller, former Accel partner Luciana Lixandru, former EQT Ventures partner Zoe Hewitt and George Robson, who was previously product manager at the fast-growing fintech company Revolut. However, there are no plans to stop there. "We are currently looking for a younger person who has not attended school for four or five years to help us with our investment efforts," said Miller. When asked if this person is likely from an investment bank (where many venture capitalists start their careers) or another VC firm, Miller said it would be "someone who has likely worked as an investor in some form," but declined it off to be more specific.
According to Miller, the Menlo Park team will be "closely involved in all European investments".
"We handled this previously from California and now we've added some extra people so it doesn't feel like it's a team of four to five, but a team of 24 to 25," he said.
Sequoia is also in the early stages of building a scout network of angel investors in Europe to find and invest in new companies. The company, which has a similar network in the US, does not disclose how many scouts it has.
Lessons from Google Ventures
Sequoia isn't the first well-known US VC company to expand into Europe in recent years. Google Ventures (now GV) started its own European office in 2015 with five partners from London. However, things did not go according to plan and the European fund was dropped after California headquarters reportedly turned down "many" investment ideas from its London partners.
Miller said Sequoia spoke to "a lot of people" at GV before settling in London. Ultimately, Sequoia decided to start small and expand over time. Miller said "moving forward incrementally rather than quickly working with five new partners", which GV has done, will allow Sequoia to bring in the new team members and "have that better relationship between the two teams."
Sequoia's European business is much more closely linked to its main US business than Sequoia India and Sequoia China. "The difference is that Europe will not be a stand-alone, stand-alone fund," Miller said. "It will be part of the US fund."