It is also a big jump up for LSP from the $280m it raised for its fifth fund in 2016 (joined by a €280m second health economics fund a year later) as the overall venture ecosystem in Europe soars.
Data provider Pitchbook in its annual report for Europe said: “The median sizes of deals involving non-traditional [such as corporate venture capital (CVCs), pension funds, sovereign wealth funds (SWFs) and hedge funds] investors reached new decade highs across all stages in 2019.”
Pitchbook added that while CVC-backed deals at the early-stage were double the €5m median pre-money valuation last year, “deals with CVC participation garnered a median valuation of €23.6m more than deals without, marking the largest disparity between the two on record”.
Its report added: “The difference in absolute terms between the two looks set to grow in the next decade…. Mitsubishi’s 20% equity stake in [UK-based] OVO Energy in 2019 was one example of how corporates are influencing the ecosystem. Mitsubishi injected €246.9 million of equity into the company, which brought its post-money valuation to €1.2 billion. While the deal was not part of a syndicated financing round, the investment demonstrates how corporates are building their portfolio of direct investments into startups.”
For entrepreneurs, capital is an important part of building their business, along with finding customers, developing their products, hiring staff and, eventually, an exit – all of which a corporation can potentially help with.
For VCs, therefore, the unequal firepower and value-add they offer startups can seem daunting. One solution is to coopt these new power players into their funds and offer it on to entrepreneurs as proof they have the resources and potential insights to offer beyond a bit of advice and faded contacts book.
The best VCs, whether LSP or NEA or Andreessen Horowitz in their managing partners’ keynotes at the GCVI Summit in January have recognised this and the world will be a better place with the entrepreneurs more likely to achieve their goals as long as their interests are held central rather than the incumbents.
