How can European startups effectively raise capital and succeed?
According to Reshma Sohoni: “Early stage investment opportunities have never been better in Europe. There is real choice in your hands right now as to who you can raise funds from.”
Reshma is Partner and Co-Founder at Seedcamp, one of the oldest and most respected European accelerators. She started Seedcamp in 2007 to help European founders realise global success through first round ‘smart capital’ – investment, talent and advisors all rolled into one.
Previously, it was difficult for startups in Europe to get early stage funding.
“At each stage, you’d expect to raise half the funding that US companies would raise.”
Now, with the emergence of seed VCs in Europe, primarily in London and Berlin, it’s much easier to raise capital.
Crowdfunding and government support
According to Reshma, it’s not just the emergence of seed VCs that has caused this rapid shift. Crowdfunding has thrived in recent years, helping founders succeed by turning customers into shareholders.
Tax benefits have also made a huge difference. A combination of income tax relief, no capital gain, tax offset loss, and phenomenal growth in investment, in part thanks to government support, has made it easier to raise capital in Europe.
Smart capital: more than investment
VCs today are hands-on, providing more support to startups than ever before. They’re getting involved in sourcing talent, networking, marketing, creating partnerships, and operations. This is all good news for European startups.
However, Reshma warns us not to believe in the myth that every great company gets funded:
“There is a ton of money in Europe, but not everyone will get funded. Investors are still risk-averse and raising funds takes time. Even if you’re great, it’s tough.”
According to Reshma, the best thing to do is:
“Get off the conveyor belt and make your own way.”
Watch Reshma Sohoni's full talk here: