Go West
Raising funds as one of the first – if not the first – institution to fund the tech SMEs we work with, we're often asked for advice on their fundraising efforts. We make around 200 loans a year, so naturally we’ve built strong connections with VCs and usually have good insights into who might be the right investors for our clients. However, our advice is usually a bit different: Go West.
Raising funds
While the right investor ultimately depends on a company's stage, sector and ambitions, one trend has become increasingly clear. The most ambitious UK startups are looking beyond Europe and engaging with US investors much earlier in their fundraising journey. The difference isn't simply the amount of capital available; it's the scale of the ecosystem, the depth of specialist expertise, and a greater willingness to back businesses with global ambitions. As the data below illustrates, these differences have a meaningful impact on fundraising outcomes.
Source Preqin, Perplexity (which itself used Dealroom, OpenVC, SEC filings and the company’s own websites). If you're struggling to see the European ones, they are Balderton Capital, Atomico, BGF, Sofinnova and Partech.
As the chart above reflects, the pools of capital, depth of expertise, and willingness to take risks in the US startup ecosystem often leaves the European one in the dust.
US vs European Venture Capitalist
Of course, the largest VCs aren’t always the best fit for every opportunity. But overall, our ChatGPT-generated image captures the fundraising picture in the US vs Europe quite well.
USA - Pros: more capital and more funds; higher valuations; faster response time; clearer investment process; facilitates access to US markets. Cons: distance; may be restricted on European investments; aggressive return targets.
Europe - Pros: proximity; more capital for climate tech. Cons: low risk tolerance; lower expertise, can feel like a cottage industry; lack of scale-up expertise.
In the end, while going west might not be the answer for every company, the opportunities and resources across the Atlantic are worth considering, especially for ambitious startups aiming to scale quickly and access larger markets.