📶 Europe vs. USA

Comparing venture returns across continents, carbon capture is somehow still getting attention from investors, and more on the journey to autonomous agents

October 02, 2024 • Estimated Reading Time: 6 minutes

Sponsored by

Good morning 👋

We asked yesterday about the “software-as-a-weapon” thesis from the Slow Ventures guys, and you all answered.

The verdict? You all disagree.

I guess time will tell.

Today we’re debating over geographical returns between the US and Europe with some data.

P.S. 💰 Are you a full-time investor?

TOP STORY
Europe vs. U.S. VC: What the data really shows 🇺🇸

Venture capital returns are down across both Europe and the U.S., but the recent PitchBook analysis tells the real story with some more data.

On a one-year horizon, Europe’s IRR is -1.6%, outperforming the U.S., which saw -4.9%. Over five years, however, U.S. funds have delivered far better results, thanks to a larger market, stronger exit opportunities, and a faster recovery in valuations.

Why it matters: For LPs, geography plays a crucial role in shaping return profiles.

Europe’s short-term outperformance is linked to its steadier valuations and rising exit multiples, particularly post-2022 when tech stocks in the U.S. took a hit. In fact, during 2022, Europe's median exit multiple surpassed that of the U.S., reversing a decade-long trend.

The U.S. benefits from a more mature market, quicker exits (5.1 years versus 5.4 years in Europe), and historically larger exits, all of which bolster its long-term performance.

What happens next: Over a long enough time horizon, always bet on the US.

With median late-stage valuations jumping 43% in the U.S. in 2024, compared to a 2.8% decline in Europe, American funds are set to regain their edge. While Europe’s growing ecosystem and more conservative valuation approach have made it a safe bet in recent quarters, U.S. funds will likely pull ahead again as global VC markets stabilize and larger exits return to the fore.

For LPs, it’s a trade-off between Europe’s near-term stability and the U.S.’s potential for higher returns over the long haul.

Together with Vestberry
Is it possible to automate your VC portfolio reviews with AI? 🤖

Short answer: yes.

In fact, you can set up automatic weekly, monthly, or quarterly portfolio performance reviews using OpenAI along with tools like VESTBERRY, Slack, Calendly, and Gmail.

✅ Stay updated on your portfolio's performance
✅ Provide timely support to your portfolio companies
✅Give yourself (and your portfolio) more leverage

TWEET

HEADLINES
What else we’re reading

  • 3 charts: Startup founders and VCs find more equal footing (Pitchbook)

  • Carbon Capture, Storage And Transformation Is Still A Popular Funding Theme (Crunchbase)

  • Sequoia backs Pydantic to expand beyond its open source data-validation framework (TechCrunch)

  • Y Combinator is being criticized after it backed an AI startup that admits it basically cloned another AI startup (TechCrunch)

  • The journey to fully autonomous AI agents and the venture capitalists funding them (ZDNet)

Together with 1440

News for humans, by humans.

  • Today's news.

  • Edited to be unbiased as humanly possible.

  • Every morning, we triple-check headlines, stories, and sources for bias.

  • All by hand with no algorithms.

Thanks for reading this far and giving us a little bit of your attention this week.

Feel free to unsubscribe whenever this stops becoming valuable to you.

Reply

or to participate.