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The future of venture capital in Europe?

This year’s Slush conference, held in Helsinki, brought some of Europe’s most promising start-ups together with technology giants including Spotify, Alibaba and Rovio.

Oxford Capital attended the event, which highlighted the opportunities and challenges facing entrepreneurs and growth investors across Europe.

Walking around Helsinki’s Kaapelitehdas building, it was hard not to be impressed by the energy and momentum which seems to have taken hold of the start-up scene across Europe in general, and Scandinavia in particular. In recent years the astronomical rise of Rovio and Supercell, together with the dispersion of talent from previous regional dominators like Nokia, have put Helsinki firmly in the centre of world gaming and more broadly software development. From this success, a whole new start-up ecosystem has been created.

The main messages from the conference were:

  • The face of European VC is changing – the old guard are going through renewal, and there is increasing evidence of specialisation amongst smaller funds.
  • The future of European entrepreneurialism is to find new centres of excellence to challenge the dominance of Silicon Valley, rather than drawing from and being subservient to the California tech scene. It is clear that nobody expects the emergence of a single European hub, but rather the continued development of islands of innovation, such as London, Berlin and Helsinki.
  • The availability of capital has diminished, but the proliferation of enabling technology has more than countered this issue by helping start-ups to have lower capital requirements.
  • The future of gaming is mobile, but the opportunity for investment (for non-connected investment firms) in the gaming space is fraught, given the binary nature of viral games and the connected nature of the industry.
  • The major investment areas across northern Europe are still gaming, cleantech, B2B software, digital health, and Big Data. Investors are interested in entrepreneurs who are attempting to tackle major problems in these sectors.
  • There are opportunities to innovate and win market share in all the sectors mentioned above, even those that are comparatively well-established.
  • Larger European VC houses are often making extremely focused investments, such as backing companies that have produced a single app.
  • VCs in the US do not play a significant role in the European VC scene, and there is no expectation that this will change.
  • Negative attitudes to failure still form a cultural obstacle to entrepreneurialism in Europe, as compared to the US start-up scene.
  • Growth companies should seek to take to expand internationally soon after proving their concept in their home market, rather than seeking incremental growth. If they are too slow to expand overseas, they risk losing out to competitors