A pair of London investors are on a mission to get more venture capital money flowing into European startups.
Joe Schorge and Chris Wade, the duo behind newly launched Isomer Capital, want the pension funds that have typically backed trusted Silicon Valley investment companies like Sequoia and Andreessen Horowitz to start putting their billions into European venture capital firms.
“There are lots of cool startups in Europe but these startups need capital,” Wade told Business Insider this week.
“We’re building this European startup ecosystem in Europe with about 1/5 of the capital that’s available in the US. The big pension funds do not invest in European VC funds.”
Wade declined to comment on the exact pension funds he was referring to, hinting that he was in talks with a number of them about investing in Isomer Capital.
There was over $36 trillion (£25 trillion) held in pension funds worldwide in 2014, according to the “Global Pensions Assets Study” carried out by researchers at professional services firm Towers Watson.
“We want to provide a vehicle for pension funds to invest in European VCs,” said Wade. “Joe has been investing on behalf of these pension funds for the last 15 years through much bigger funds so he’s a safe pair of hands. They themselves are gently moving towards a position where they can’t ignore European tech for too much longer. It’s no longer the case that you lose money when you invest in European tech.”
Both public and private pension funds — investment pools responsible for the retirement benefits of millions — give venture capital companies a considerable amount of the money they need to invest in promising startups. Indeed, public pension funds made up the biggest single source of funds flowing into venture capital over the last few years, according to Dow Jones Private Equity Analyst Sources of Capital survey. In 2014, they contributed 20% of the sector’s overall haul.
Wade admitted that it could be up to a decade before big pension funds start investing in European tech funds on the same level that they do in the US, adding that fast-growing startups like restaurant food delivery service Deliveroo need to have successful exits before certain pension funds will feel comfortable backing European tech.
Venture capitalists also invest on behalf of family offices, insurance companies, and charitable foundations.
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