Balderton Capital, a prominent European venture capital firm known for its investments in Revolut and Wayve, has successfully raised $1.3 billion across two new funds. The Early Stage Fund IX will receive $615 million, while the Growth Fund II will be allocated $685 million, signaling a significant boost for European venture capital.
This new funding reflects a cautious optimism among venture capitalists, as European VC shows signs of recovery following a period of stagnation post-ZIRP and the COVID-driven bull market of 2021-2022. Research cited by Balderton indicates that European VC funds have outperformed their U.S. counterparts over 10- and 15-year periods, based on data from Invest Europe and Cambridge Associates.
Suranga Chandratillake, a partner at Balderton, revealed that the fundraise process was notably swift, with about 80% of funds coming from existing limited partners. The firm also secured investment from a significant U.S.-based institution, reflecting growing global recognition of European venture capital’s stability and potential.
Despite this, Balderton’s focus on European startups means it has missed out on high-profile foundational AI investments from Silicon Valley, such as those in OpenAI and Anthropic. The firm has instead concentrated on emerging companies within Europe, with recent investments including Checkly, SAVA, and Tinybird.
Balderton's strategy appears to be centered on investing in companies that leverage AI technologies in specific applications rather than competing directly with Silicon Valley giants in foundational model development. Chandratillake noted that while foundational models require substantial capital better suited for private equity firms or large public companies, there are significant opportunities in companies that apply these technologies to solve specialized problems.
Industry reactions to Balderton’s new funding are mixed. Brent Hoberman of firstminute capital and Susanne Najafi of BackingMinds VC expressed positive views, highlighting the benefits of increased capital for European startups and the potential for European growth funds to better compete with U.S. counterparts. Conversely, Andrew J. Scott of 7percent Ventures warned that European VCs need to take bolder bets on foundational technologies to prevent the U.S. from dominating key sectors like AI, space, and robotics in the future.
As the European VC landscape evolves, Balderton’s new funds and strategic focus underscore a pivotal moment in the region's investment landscape, balancing cautious optimism with strategic decisions in a competitive global market.
