Family offices and the ultra wealthy are piling into investments in European tech. It's another sign that the continent is becoming more like Silicon Valley.

wealthy

  • Europe has minted a new generation of tech millions
    after some notable IPOs and acquisitions. These wealthy founders
    are now re-investing their earnings back into the continent’s tech
    ecosystem.
  • Private wealth has doubled from $33 trillion in 2008 to
    $70 trillion in 2018 with some 92% of respondents saying they now
    invest in venture capital, according to a survey by London-based
    fund Talis Capital. 
  • Money committed to VC now outstrips real estate among
    ultra-high net worth individuals as they hunt for yield outside of
    traditional assets. 

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The young and ultra-wealthy want to pile their billions into
tech startups.

Research conducted by Dealroom.co for London-based fund Talis
Capital has found that increasing numbers of family offices and
ultra-high net worth individuals are committing larger proportions
of their finances towards European tech, via venture capital
funds.

It’s a sign that the continent’s ecosystem is becoming more like
Silicon Valley where millionaires and tech entrepreneurs are major
investors in new startup ventures.

Where previously Amazon founder Jeff Bezos invested in Uber and
Twitter, now European tech and other business founders may be
well-placed to fuel the next big thing. 

In the past decade, private wealth has doubled from $33 trillion
in 2008 to $70 trillion in 2018 with some 92% of respondents saying
they now invest in venture capital, according to a survey by Talis
Capital.

Talis Capital is a London-based venture capital fund which
invests on behalf of wealthy private individuals

TransferWise founders Kristo Käärmann and Taavet Hinrikus

This is down to a few reasons. One is that some traditional
types of investment don’t offer the same attractive returns that
they used to, such as property. Investors seeking higher returns
need to look at riskier models, such as venture capital.

“It’s a product of a hunt for yield in private markets and
investors turning away from traditional assets,” Vasile Foca,
cofounder and managing partner at Talis Capital, said in an
interview with Business Insider. 

Another reason is that successful exits by European
entrepreneurs have created new millionaires who want to put money
back into the ecosystem. A notable example in Europe is Skype
cofounder Niklas Zennstrom, who set up venture capital firm
Atomico.

iZettle, and Adyen are just some of the major European exits in
recent years while individual entrepreneurs such as TransferWise
cofounder Taavet Hinrikus have been notable investors across a
number of sectors. 

These newly wealthy entrepreneurs don’t account for all
ultra-high net worth individuals investing in venture capital, but
Talis believes they account for some of the shift.

Over the past five years, the number of individuals and families
using private wealth to directly participate in VC rounds in Europe
has grown five-fold to a record-breaking $5 billion. According to
the research, 2019 could yet beat that record.

In fact, Dealroom calculates that 20% of new venture capital
funds raised in Europe came from private limited partners and that
18% of the $28 billion investment in European startups in 2018 came
directly from private wealth.

Young, wealthy investors want to back tech

A survey of investors in the US with more than $25 million to
hand earlier this year found that the average age of wealthy
investors had dropped to 47, down from a previous 58. While
youthfulness doesn’t always scream tech savvy, it may well be
behind an adoption of hitherto tricky bets.


Research from BNP Paribas
found millennials are more than twice
as likely to invest in VC funds and startups than other age
groups. 

So-called digital natives are more interested in technology but
still need help with understanding venture capital as an asset
class, according to Matus Maar, cofounder and managing partner at
Talis Capital.

“Having more capital means European investors can make bold bets
like they can in the US or China,” Maar said. “The key is educating
investors as to how VC works as it has previously been quite opaque
and they need to understand the returns cycle is longer than other
assets.” 

Similarly, a lack of tech expertise makes it harder for first
time venture investors to do the necessary due diligence alone but
are still keen to be part of a an exciting part of the market.
Since 2013, tech exits in Europe have totalled $354 billion with
$115.5 billion worth of exits last year alone with Spotify’s $30
billion deal standing out. 

“Everyone knows you need to invest in tech and investors can see
that it’s not just the US that can create large companies in tech,”
Foca added.  

SEE ALSO: European
startups are being flooded with cash thanks to mega-rounds and US
giants hovering for deals


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Family offices and the ultra wealthy are piling into investments in European tech. It's another sign that the continent is becoming more like Silicon Valley.