Accel has raised a new $650m fund to back European and Israeli early-stage companies.
It is the American VC's eighth fund focusing on the region, with its first dating back to 2000. Accel has backed some of Europe’s biggest tech companies such as France’s Blablacar and Doctolib, Lithuania’s Vinted, Romania’s UiPath and the UK’s Monzo and GoCardless.
Writing tickets ranging from $1m-$20m for startups at seed and Series A, the VC aims to make up to 30 investments over a three-year deployment period. Part of the fund will be set aside as a reserve to support top portfolio companies in their subsequent rounds, “on a company by company basis”, says Accel partner Harry Nelis.
Like Accel’s previous vehicles, the fund is generalist and will invest across several sectors including cybersecurity, enterprise software and AI.
France and the UK, in particular, are emerging as hotspots for AI investments, according to Nelis.
“When it comes to AI, there are two key centres in Europe,” he says. “One of them is around Deepmind in the UK and the other one is around FAIR [Facebook AI Research] in Paris.”
Accel is understood to be leading a seed round in Paris-based startup Holistic AI, which was founded by two ex-Deepmind scientists, according to four sources. One source tells Sifted that it is a $200m round including a $120m convertible note. Bloomberg recently reported that the round has closed.
Nelis declined to comment.
Betting on Europe
The new fund reflects Accel’s strong commitment to Europe, Nelis says, even as the recent economic downturn sees some foreign VCs slowing down their investments in the region or relocating their European teams.
In 2023, total funding for European startups amounted to $45bn — less than half the funds raised in 2020, according to data from VC firm Atomico.
It follows two years, between 2020-21, where low interest rates and a pandemic-induced tech boom saw startup investments speed up in Europe. Many foreign VCs like Tiger Global or Coatue Management ramped up deals in the region during that period.
Some of them are changing priorities. At the start of 2024, Coatue Management shut its European office in London just two years after it opened.
“When the market gets really hot, it attracts a few players who come,” says Nelis. “They end up being tourists rather than long-term residents and then they go back home.”
“We are super excited to be investing [in Europe] right now. If some people have gone home, so be it.”
Spotting hot deals
The departure of some foreign VCs means there is “marginally less competition” for investment rounds into startups, says Nelis. He adds that winning deals with the liveliest European companies — particularly in AI — is still very tough.
Accel is banking on spotting Europe’s next billion-dollar companies at the earliest stage possible — and to do so, it counts on tips from the hundreds of entrepreneurs it has backed in the region over the past 24 years.
“We’ve already made more than 200 investments in Europe over the years, so we have relationships with about 200 entrepreneurs across Europe,” says Nelis.
“They typically let us know when they see something interesting and they help us win a deal when we’re in a competitive situation by putting in a good word.”
In 2021, Accel also launched a scouts programme across Europe. As part of the programme, selected scouts — usually startup founders or executives — are allocated $200k to invest in European startups.
There are around 40 Accel scouts in the region — twice as many as when the programme launched.
