Revolut CEO Nikolay Storonsky speaks on stage at the TechCrunch Disrupt conference in San Francisco, California.
Kimberly White | Getty Images
LONDON – Silicon Valley venture capitalists have boosted business growth on their doorstep for decades, but the coronavirus pandemic is making these tech investors more global in their outlook, according to Alex Kayyal, who heads Salesforce Ventures International.
Speaking to CNBC on Wednesday, Kayyal said it doesn’t matter where start-ups and venture capitalists are located in relation to each other, now that everyone is looking for money from a distance. “In a lot of ways, because we’re all far apart, it level the playing field,” he said on a Zoom call.
Before the arrival of Covid-19, founders of European start-ups often had to travel to California and visit venture capital firms on Sand Hill Road if they wanted to raise a major funding round, because it is there found in most of the world’s venture capital funds.
Once on the ground, entrepreneurs like London, Paris and Berlin should try to convince VCs in the valley that they deserve support before American start-ups, which is far from easy, according to Kayyal. If you were a European founder, you were “always [at] a drawback in many ways, ”he said.
But that has all changed now. Today, it makes no difference to a Valley-based investor whether “a business is a 30-minute … or an eight-hour flight,” Kayyal continued.
Although Kayyal himself is based in London, he said Salesforce Ventures has invested in companies around the world that he has not met. “It’s all thanks to Zoom,” he said.
What the numbers say
Data released Thursday by venture capital analysis firm Dealroom shows European start-ups raised more than € 2 billion ($ 2.3 billion) more from US investors between January and October from this year than over the same period last year, investments rising from 98.1 billion euros. in 2019 to 100.6 billion euros in 2020.
While things are far from perfect for all European start-ups, barely a week has passed in the pandemic where there hasn’t been at least one well-known company on the continent announcing it had lifted a grand tour led by American investors.
Indeed, the Berlin travel start-up GetYourGuide announced Thursday that it had raised 113 million euros from investors as part of a new round of funding led by the American group Searchlight Capital Partners. Elsewhere, London-based fintech app Revolut raised $ 80 million in July from TSG Consumer Partners, a San Francisco-based private equity firm.
However, Europe still lacks a tech company worth hundreds of billions of dollars. In the United States there are several and companies like Alphabet, Apple, and Microsoft have even rocked a trillion dollar market cap. Meanwhile, China has huge companies like Alibaba and Huawei.
The pandemic does not only have an impact on access to finance. The rules of the game have also been leveled in terms of access to talent, according to Kayyal, who pointed out that start-ups focus less on hiring people in the countries where they are based.
Andy McLoughlin, a British venture capitalist at Uncork Capital in San Francisco, told CNBC his company has supported several companies with European founders who were working in their country of birth while the United States was stranded.
“These are US headquarters entities, but many of their employees are based outside of the United States,” McLoughlin said. “This begs the question of what even a seat means today given the distribution of people over the past few months?”