Earlier this month on #FFLIVE, Founders Forum teamed up with Lakestar to co-host a session with the CEO’s of Europe’s state-backed Development Banks, moderated by Lakestar’s Founder, Klaus Hommels.
Representing the French-based Bpifrance was Nicolas Dufourcq, alongside Keith Morgan CBE of the UK’s British Business Bank, and Jörg Goschin from KfW Capital, a 100% subsidiary of KfW Group investing in German and EU venture capital funds.
We would like to offer our thanks to Nicolas, Keith, Jörg, and Klaus for generously giving their time, alongside the 160+ attendees to the session for their contributions.
The following insights emerged from the discussion, focusing on venture capital in the European ecosystem:
1. Venture capital is important for European long-term wealth creation, job creation, and economic growth
- European venture capital is an attractive and financially profitable asset class, and Europe would benefit from promoting a culture of confidence in investment
- British Business Bank recently conducted research showing that returns in European venture capital are at least as good as returns in US venture capital
- State-development banks should be ‘cornerstone investors’ of more pan-European growth funds
- Climate Tech and Industrial Tech are key growth areas and likely to be the next European Mittelstand 2.0 companies
2. The EU should have a pan-European strategic tech outlook to compete against America & China
- There needs to be strategic European tech consolidation to build up Europe-centric tech solutions, such as a European payments tech system: if, for some reason, Mastercard, Visa, and Amex become unavailable to Europe, there would be no consumer retail payment platform
- Similarly, European tech consolidation could boost cloud services and the vaccine and life-sciences industries
- Europe loses out on returns by allowing Chinese and US venture capitalists to cherry pick and acquire the best European tech companies
- Europe must therefore play to its strengths by investing in areas such as industrial DNA, robotics and AI in Germany and life-sciences in the UK
- There should be more collaboration amongst, and creation of, pan-European growth funds, for example, we need to create Franco-German and UK-Scandanavian funds
3. Policy solutions should work to bring venture capital closer to universities & research departments to foster opportunities for early stage startups
- University venture capital funds such as those at ETH Zurich, Cambridge, and Imperial are widening the funnel of investment for early stage startups and increasing collaboration opportunities between academia and industry
- Venture capital in universities allows for a better match between early stage ideas and capital markets, and Europe should look to replicate successes in the US and China
Nicolas Dufourcq has been Managing Director of Bpifrance, the French public investment bank, since February 2013. A graduate of HEC and ENA, Nicolas began his career at the Ministry of Economy and Finance then at the Ministry of Health and Social Affairs in 1992.
Keith Morgan led the planning and establishment of the British Business Bank and was appointed CEO in December 2013. Prior to this, Keith was an Executive Director of UK Financial Investments (UKFI), joining in 2009 to manage the UK Government’s shareholdings in Bradford & Bingley and Northern Rock.
Jörg Goschin is the Co-CEO and Senior Managing Director of KfW Capital. As a founder and experienced investment professional, Jörg has in-depth market knowledge and a close-knit network in the venture capital community.
Klaus Hommels is the Founder of Lakestar, a Zurich-based firm with offices in Berlin, London, New York and Hong Kong. In February 2020, Lakestar closed a long-anticipated $735 million fund focused on European tech.
The following resources offer further information about the available support for tech startups across Europe:
Bpifrance: Covid 19: Bpifrance emergency plan
British Business Bank: Government Future Fund announces eligibility criteria
KfW Capital: Corona Matching Facility
Sifted: Support measures for startups affected by coronavirus: the ultimate resource
Sifted: UK government promises speedy rollout of startup bailout fund
Sifted: Why France is bailing out its startups
TechCrunch: France announces $4.3B plan to support startups
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