The VC market in Italy, Europe, and USA

Few months ago I had the opportunity to watch an interesting video where Fred Wilson discussed with some entrepreneurs in Milan about his VC experience. Following a selection of Fred’s observations:

  • Tolerance for risk is not existing in the EU mind-set
  • Out of 20 investments, 5 will fail
  • VCs in USA look for entrepreneurs that are taking great risks
  • Fred has invested in 6/8 startups in various EU cities (e.g.: Berlin, London)
  • There are few good EU investors that are capable to accept the USA investing approach
  • Winning pitches, are the ones where the entrepreneur is capable to walk him on the top of the mountain and show paradise land on the other side
  • When deciding between product vs. team, Fred decision is toward the product because is a reflection of the team
  • Startup Communities from Feld is a book that Italians could benefit from, because is a guide for building the right ecosystem for the startups growth

One of the points that got my attention was the Fred comments regarding his investment approach vs. European VCs approach.  Fred observations led me to think about some of the consequences of these different approaches. A consequence maybe is related to the VC markets dimensions in USA and Europe. Following some posts describing the VC market dimension in Italy, Europe, and USA:

  • The VC market in Italy: the post is from the founder of Dpixel, Gianluca Dettori. The author analyses some of the findings from the latest EVCA year report. Following some finding: In Europe the VC market in 2011 raised 4,85B€, the VC firms are 135 and 29 raised new funds in 2011. The companies that have been financed are 3.143, rising 4B€, with an average 1M€. The investments in Southern Europe (Greece, Italia, Spain, and Portugal) raised 11% of the total. Considering an equal sharing of the funds between the 4 countries, Italy received 3% of the total 4B€. To have some additional information related to the VC/startup Italian environment, Mindthebridge.org every year publish an interesting analysis of the startup Italian scene
  • The VC market in Europe: To have some understanding of the market in 2012, I will use the following article from the WSJ: European Venture-Capital Industry. The post highlights the VC market decline for 2012. Across all sectors during 2012 venture capitalists put €4.4 billion ($5.9 billion) into a total of 1,074 deals, a slight drop of 9% in capital invested and 11% in the number of deals completed in 2011. To follow the VC/PE activity in the European technology market I will highlight the following report from go4venture website.
  • The VC market in USA: for the latest updates we can refer to the pwcmoneytree report, or we can refer to several techcrunch articles (1,2,3). From the previous sources we learn that the USA VC firms raised $20.6 billion from 182 funds in 2012, representing a 10%  increase in dollar commitments when compared with 2011, which saw 18.7 billion raised from 187 funds

Which are the other consequences of the different investment strategies between European and USA VCs?

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