4 Venture Capital differences between Europe and the Americas

Venture capital (VC) is a type of private equity financing that firms use to raise capital during the startup, early growth, and expansion phases of a business. They typically invest in high-growth companies with the potential to generate large returns in the mid-long term (5–10 years).

There are some key differences between venture capital in Europe and the Americas.

1. Funding size: VC funding rounds in the US are typically larger than those in Europe. For example, the median Series A funding round in the US was $17.5 million in 2022, compared to $7.7 million in Europe.

This is partly due to the larger size of the US VC market, as well as the different investment strategies of US and European VCs.

2. Investment stage: US VCs are more likely to invest in early-stage companies than European VCs. European VCs are more likely to invest in later-stage companies, such as Series B and Series C rounds.

This is partly due to the different risk appetites of US and European VCs, as well as the different stages of development of the European startup ecosystem.

3. Investment thesis: US VCs are more likely to have a generalist investment thesis, meaning that they invest in a wide range of industries. European VCs are more likely to have a specialist investment thesis, meaning that they focus on investing in specific industries or sectors.

This is partly due to the different sizes of the US and European VC markets, as well as the different stages of development of the European startup ecosystem.

4. Exit strategy: US VCs are more likely to have a short-term exit strategy, meaning that they look to exit their investments within 5–7 years. European VCs are more likely to have a long-term exit strategy, meaning that they are willing to hold onto their investments for 7–10 years or longer.

This is partly due to the different funding cycles in the US and Europe, as well as the different risk appetites of US and European VCs.

Overall, the venture capital markets in Europe and the Americas have some key differences:

US VCs typically invest in larger funding rounds, earlier-stage companies, and have a generalist investment thesis and a short-term exit strategy.

European VCs typically invest in smaller funding rounds, later-stage companies, and have a specialist investment thesis and a long-term exit strategy.

In simple words: The key differences between VC in Europe and the Americas:

Feature: Europe | USA

- Funding size: Smaller | Larger

- Investment stage: Later-stage | Early-stage

- Investment thesis: Specialist | Generalist

- Exit strategy: Long-term | Short-term