Silicon Valley is the undisputed centre of technology in the world — and a big part of that is the sheer amount of money being thrown at startups.
Analysis by White Star Capital, a tech fund based in New York and London, shows that Silicon Valley has over three times as many early stage tech investors as Europe. That means there’s far more money going into companies at the idea stage, which of course means there are far more companies being created.
Christian Hernandez, partner and co-founder of White Star, told BI: “We actually did some analysis of this using CB Insight data, looking at active Series A investors. We defined active as having done at least 5 Series A investments in the last 2 years.
“What we found is that in the West Coast there were over 150 active Series A investors in the last 2 year. In New York, and by that I mean New York metro area, there were only 29. And this included Californian funds investing there. In all of Europe, which includes Israeli funds, US funds coming over to do Series A, there’s only 42.”
White Star on Friday launched a $US70 million (£46 million) fund dedicated to addressing this imbalance, investing between $US500,000 (£328,000) and $US5 million (£3.2 million) in early stage tech businesses in Europe and on the east coast of America.
Hernandez, a former Facebook, Google, and Microsoft exec, says: “New York and London are fairly similar. Both have an affinity for fintech, adtech. Similar corporate ecosystems exist in those hubs. What I’ve been excited to see in the last few years, even when I was at Facebook, is the global ambition of these startups.
“There’s less people trying to build an X, Y, Z e-commerce clone in Berlin. People want to build a global e-commerce business from Berlin and that’s the type of company we want to back.”
But while White Star is trying to address the problem with early stage tech businesses, Hernandez says there’s still a big issue with tech companies needing later stage funding in Europe.
Hernandez says: “We have a second issue in Europe which is more about Series C and above funding. If you’re raising £30, £40, £50 million — who do you call? I would argue that there are 4 or 5 funds you could go to.”
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