Top U.S. VC firms are struggling to find the right staff in Europe
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Doug Leone is the Managing Partner of Sequoia Capital Global and speaks live on stage at TechCrunch Disrupt SF 2018. It took place on September 6, 2018, at Moscone center in San Francisco.
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LONDON — Some of America’s most successful venture capital firms have been finding it difficult to recruit people to lead their new European outposts, multiple industry sources have told CNBC.
The U.S. VC heavyweights Sequoia Capital (Bessemer Venture Partners), Lightspeed Venture Partners, and General Atlantic all opened new European offices in recent months or made notable expansions.
Hussein Kanji is co-founder and chief executive of Hoxton Ventures in the U.K. He said that it was “super, super difficult” for the major U.S. Venture Capital firms to find the right European talent. Additionally, he added that only a few notable hires have been made.
He said that Europe has few general partners who are trained. Kanji stated that the key difference was U.S. Venture Capitalists tend to be focused on growth, while European Venture Capitalists are more inclined to prioritise reducing or eliminating risk.
In some ways, U.S.VCs also compete with SoftBank which has its Vision Fund in London. Hedge funds such as Tiger Global are also available. Coatue are also expandingLondon
Kanji stated that U.S. Venture Capital firms would like to recruit tech investors who have previously worked together on start-up boards.
CNBC spoke with another venture capitalist who requested anonymity because they are employed by a U.S. fund that recently expanded into Europe. They said that “VC profile” is not something that European funds have.
The pair said, “It’s certainly not that there isn’t talent, as it does. It’s just that the pool candidates people are targeting seems to be more limited.”
According to the source, top investors are not “just ticking the boxes and spend two year at a startup after the preMBA program at McKinsey and Goldman before going on to get their MBA at Harvard and becoming a VC.”
Latest hires
Last March, Menlo Park, California-headquartered Sequoia hired Luciana Lixandru from Accel to be its first partner in Europe. Accel is based in Palo Alto in California and has supported many companies within Sequoia’s portfolio, such as Qualtrics, Dropbox, and Qualtrics.
Ophelia Brown of Blossom Capital, cofounder and CEO said to CNBC that Sequoia performed an amazing job in hiring Luciana. Brown also noted that Europe doesn’t have many VCs who are “growth-oriented” like her.
She said, “It is not easy to locate that talent in Europe.” That’s exactly what U.S. funds have been able to realize.”
Menlo Park-based Lightspeed appointed Paul Murphy to manage its European branch in London. Murphy was an early stage VC at Northzone. Murphy was responsible for Northzone’s investments in Hopin virtual event startup, which was valued at $7.75 Billion, despite only being 2 years old.
Alex Lim stated that Murphy and Lixandru were the only notable U.S. VC hires to Europe. He left IVP in San Francisco this summer to become a managing partnership at Blossom Capital, London.
Kanji stated that if the right candidate is found in Europe, U.S.VCs will be willing to pay large premiums. According to another CNBC source, a U.S. tech investor with a London branch is earning around $1.5 million per year. This was despite the fact that the discussions are private.
The nascent industry
The European venture capital market is still relatively young compared to the U.S. where it has been growing steadily since the dawn of the internet.
Nevertheless, Europe has experienced a substantial growth in its VC industry over the last decade. A decade ago, Europe had only around 100 technology investors and a few venture capital funds. Today, there are many VC professionals working in Europe. However, some of them have been VCs only for a short time.
CNBC spoke with Harry Briggs of Omers Ventures about the European VC market.
However, with the success of Spotify, Adyen and Just Eat, more people are now able to scale businesses to thousands thanks to Revolut.
Jambu Palaniappan is one such operator. He was the global leader of UberEats before joining Omers Ventures this month as a managing partner.
Lim stated that people coming from operational roles will require some training and many U.S. VC companies will look for individuals who are “instantly successful.”
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