European VC Firms Investing in U.S.

The VC community overseas is smaller than the U.S., but it is looking for U.S.-based companies.
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This story appears in the February 2009 issue of Entrepreneur. Subscribe »

If you're expanding your business to European markets, you might consider looking overseas for the capital you need. Many European VC firms are funding U.S.-based companies: A 2007 Deloitte survey found that 58 percent of the non-U.S. VC firms surveyed reported they were investing abroad.

European VC investment stayed relatively strong in the economic downturn. Foreign VC firms invested more than $682 million in new venture deals in the second quarter of 2008, down just 15 percent from the same quarter in 2007, according to a European Venture Capital Association study.

While the EVCA estimates that the European VC community is only about one-fifth the size of the U.S. scene, it can be a good place to find funding. So how can you tap European venture capitalists? A few pointers:

  • Tech is hot. The vast majority of European investment is in the technology sector, with clean tech and green tech companies being particularly popular, says David Ward, co-managing partner of London-based MTI Partners Limited. "Venture capital has moved on from being regional," Ward explains. "It's a global business, and we need to be on the ground to support our companies, wherever they are."
  • Network with U.S. venture capitalists to connect. That's how Chelmsford, Massachusetts-based virtual-meeting company Dimdim hooked up with leading European VC Index Ventures, says Dimdim CEO and founder DD Ganguly, 41. After connecting with VC group Nexus India, 2-year-old Dimdim got referred to Index Ventures by Nexus execs. Index Ventures was a lead investor in a $6 million round of funding Dimdim closed last July.
  • Have a strong European story. European venture capitalists want to invest in U.S. companies that are already on their turf or planning to expand there, says Anne Glover, co-founder and CEO of Amadeus Capital Partners in London. They want companies that can benefit from their home-market expertise.

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