Is there a lack of European late-stage capital?

Sifted's Eleanor Warnock published an analysis on Jan. 21 looking at how foreign investors seem to be reaping the benefits of European scale-up successes by stepping in and investing venture capital at the later stages.

Citing data from Dealroom, the article points out that US investors invested 29% of all total capital raised in European rounds of between $50 and $100m in 2021, versus only 5% for all deals under $2m. Some investors Warnock interviewed said this is due to a lack of European investors who can kick in large amounts of capital in later rounds.

Policymakers are searching for solutions to this "funding gap," and European stock exchanges are seeking ways to keep European companies from crossing the Atlantic to list their shares, the article notes.

But Antoine Papiernik, Sofinnova Partners' managing partner, says Europe should not worry too much about where the funds are currently coming from.

“Europe is on a trajectory that’s very positive but it’ll take a long time before companies are able to fundraise without going to the US,” Papiernik told Sifted on the occasion of the €445 million closing of the Sofinnova Crossover Fund in March 2021.

“If you have to list a UK company in Hong Kong or a French company on the Nasdaq, it doesn’t mean you have to become an American or Hong Kong-based company," he added. "Remain who you are, get the right set of investors, be that the Nasdaq or elsewhere.”