The next generation of founders and their vital impact on Europe’s future

How Lakestar works hand-in-hand with Europe’s top technical universities to help power the progress of venture capital investments in Europe.
2019 08 07

A healthy and flourishing venture capital (VC) environment is vital for the success of digital start-ups. Over the past two decades companies funded by venture capital have played an essential role in the US economy, producing some of the best known and loved digital companies, such as Facebook and Uber. Since 1995, USD 870 billion of venture capital has been invested to create companies with a market capitalisation of USD 6.75 trillion, which represents 34% of the US Gross Domestic Product (GDP). These numbers illustrate the significant progress of venture capital and its outstanding image in the US. But what does this mean for Europe?

Europe's biggest economy, Germany, for example, has VC financed companies with a total market cap of USD 50 billion, totalling 1.3% of its GDP. This is an astonishingly low number compared to its competitors in the US, but also compared to China.

What is the reason for this stark contrast? It begins with the nature of investment motives. While Europe can only call on private investors such as high net-worth individuals and family offices for venture capital, the US can rely on a range of institutional investors such as pension funds, insurance funds, foundations, trusts, endowments and state funds for venture capital.

Less financing power is available for venture capital in Europe

The assets are crucial. In 2018, 50 of the largest start-ups raised an average of USD 2.2 billion in achieving their success. Start-ups listed on stock exchanges raised USD 239 million from their listings in the same year, over twice as much as their listings five years earlier.

Europe is stuck in a vicious circle. It can’t retain its start-ups unless it provides more venture capital. Politicians remain reluctant to put money into venture capital as they believe that voters view venture capital as just a subsidy. As we know from other markets, it is far more than this- it is essential to Europe’s prosperous future.

Changing the public perception is vital if politicians are to support the notion that more venture capital is needed if Europe is to compete in the global digital economy. Europe has to stop playing catch up; the time is running out. If we do not take action now, we will fail to shape a key economic pillar of our future. We simply cannot afford to relinquish everything in terms of start-ups to the US and other countries such as China.

Lakestar strongly believes in Europe’s potential, its strength in developing breakthrough technologies, world leading universities and rich industrial heritage. 

Lakestar is working the leading technical universities all across Europe

We are dedicated to contributing to the future of young talent in Europe and as such, have started to work with students at technological universities. The Lakestar Entrepreneur Lectures are offered at leading universities and are aimed at selected groups of students who are interested in founding start-ups and ventures.

We believe that the best way to invest in Europe’s future, and in order to successfully achieve this integral shift in public perception, is to focus on the next generation of founders that will actively change and shape the future landscape of European technology and the venture capital ecosystem. The first series of lectures was given twice last year at ETH, the Swiss Federal Institute of Techonology, which is Zurich’s science, technology, engineering and mathematics University. The second series of lectures was given to students in Sweden, the UK and Germany. Students at TUM, Munich’s Technical University, at Oxford’s Saīd Business School and students from KTH Royal Institute of Technology in Stockholm and from two other Swedish institutions - Sting, an accelerator/incubator for start-ups; and SUP46 which helps tech start-ups grow faster - received valuable advice from experienced investors, at the same time Lakestar has been provided with meaningful insight into what is happening at Europe’s top technical universities.

By holding the Lakestar Entrepreneurial Lectures we can work hand-in-hand and power the progress of VC investments in Europe and the future of the VC ecosystem.

This article is part of the 'Lakestar Briefing', a periodical publication about Lakestar's portfolio companies and our network of inspiring minds we like to work with. If you wish to subscribe please click here to fill out your name and email and we will be in touch.