European founders have had many new investor names to learn in recent years, as hedge funds like Coatue and Tiger Global became major players in the venture capital industry almost overnight.
These “crossover investors”, which dabble in both private and public markets, have upped their activity globally — and Europe is no exception.
26% of VC capital in Europe in 2021 — representing $53.4bn — was contributed by crossover investors versus 13% four years prior, according to a new report by French growth investor Revaia using Pitchbook data. Crossover investors include hedge funds like Coatue, growth equity investors like TCV and big institutional investors that invest ahead of a public listing like T. Rowe Price.
And these investors can help startups get on the path to an IPO or exit given that they also often manage large public portfolios.
“They can introduce you to companies who have done things well, as well as banks or intermediaries that can help you to achieve your goals,” says Vincent Huguet, founder and CEO of French startup Malt. Malt raised an €80m round from crossover investor Goldman Sachs and Eurazeo in 2021.
“I would say it's mostly the connections that are important in preparing you for the IPO process and having the right people to talk to in order to not make the mistakes they have done in the past or learn from the good things that they have done.”
The outlook for crossover investors in Europe
Investment in private tech companies cooled off drastically last year — by both crossover investors and more traditional VCs. Comte says crossover investor activity in Europe this year will depend on the strategy of the investor.
“Some will stay in perpetuity and some will come back whenever market conditions are favourable,” he says.
Until chunky local growth VCs can emerge, crossover funds will continue to be important contributors of late-stage capital, the Revaia team says.
Revaia founder partner Alice Albizzati says that continued government support from Europe for later-stage funds will be important to create European growth-stage investors.
Eleanor Warnock is Sifted’s deputy editor and cohost of Startup Europe — The Sifted Podcast, and writes Up Round, a weekly newsletter on VC. She tweets from @misssaxbys
