Michael Jackson’s Post

A founder pitching VCs after their previous startups have all failed. 😉 "What can be, unburdened by what has been." 🤔 🤷🏼♂️ Oh USA, you deserve so much better than the two geriatrics running for President, and their sycophant entourages. Kamala sure ain't the answer btw. Happy 4th of July! 🇺🇸 💥 🦅

Good news about European venture performance is always welcome! 🇪🇺 🥳 But...and actually there are many "buts" on this one...these numbers are pretty meaningless. Where to start? - Apparently the European data is based on just 223 European VC funds spanning vintages from 1986 to 2023*. That's a low single digit percentage of the total number of European VC funds raised over that time. That's incredibly statistically insignificant. - It's IRR and not DPI. IRR can be more easily manipulated. It's done a lot. DPI matters way, waaay more than IRR. - The numbers are of unrealized performance. 😳 Which we all know you can't eat, and can also be rigged. Seriously, who gives a shit about unrealized gains? - Despite all that the numbers end up so close anyways that they're within any reasonable margin of error. So pretty neck and neck in an illiquid asset class. 🤷🏼♂️ - Also, let's be honest, averages don't matter in venture. It's a top decile driven asset class. It's all about outliers. That's way more important than geography. European VC is notoriously opaque. Academics often avoid including it in research on VC because of this. Much of European government LP data isn’t public, and government LPs make up a large chunk of LP commitments in Europe. Also, there have been examples of European government LPs selling underperforming fund stakes to other government buyers to prop up their numbers. Any report should be taken with a grain of salt. It’s adorable though that some quickly point to it having to be accurate simply because CA is involved, as if CA is infallible. CA has an agenda in doing this for a client (Invest Europe) which itself has an agenda to push. European venture has made great progress. It's a strong asset class that deserves more LP attention (much of the upside in European tech goes to North American LPs). Let the real numbers speak for themselves though. This ain't that. TLDR: These numbers are unrealized IRR based on a statistically insignificant dataset of funds. It's a nothingburger. https://lnkd.in/eytxpqpk * https://lnkd.in/eE3HTV5W

There’s more US pension fund money in UK tech than there is British pension fund money in UK tech. There's also more British pension fund money in US tech than in British tech. 🇺🇸 🇬🇧 Unless government mandates it, that won’t change anytime soon. To be fair though, major market reforms are needed, and it’s all connected - Europe's public markets are shallow and fragmented, European pensions are less focused on growth, Europe is a weak exit market overall for tech, etc. 📈📉 Money tends to find its way to potential good investments. European VC is no different. If performance is strong over an extended period, even conservative European LPs will eventually come around...someday...probably. 😉 Good stuff from Matt Clifford and Harry Stebbings. 👍🏻 https://lnkd.in/efmbcSY5

European fundraising calendar. More accurate than it has any right being. 🤣 There are some regional variations - northern Europeans go on summer holiday earlier than continental Europeans, the French have a lot of long weekends in May, etc. Many European entrepreneurs know this and plan accordingly (you may think this a joke, but I know European startups which have planned their runway between fundraisings to take into account not closing during the summer holiday period). What's nice though is Europe now fills up in summertime with US VCs on "working holidays" so European entrepreneurs can take advantage of them being here. Good stuff from Andrew Rea. https://lnkd.in/ea8TFwtG

"Britain also suffers from a dearth of 'true risk capital and there’s not a lot of managers who are comfortable taking the risk that is required to manage that capital. In the City of London there’s a lot of capital but it tends to be focused on low risk, low reward asset classes like gilts.'" And most of the rest of Europe is even more risk averse when it comes to investing. Value created by European innovation, technology, and entrepreneurship routinely flows out of Europe. The hard reality is that Europe is simply an extension of US capital and financial markets. European countries should lean into it and finally structure their systems accordingly. “Private equity has been the biggest driver of returns for our portfolio. I don’t think there’s extra risk — what you do give up is liquidity. Private markets work well when you have pooled assets with a long-term time horizon.” - John Graham European investors should take note. 📝 https://lnkd.in/eaDYkjig

Europe represents just single digit percentages of Nvidia’s total revenues, and Europe is home to just 3% of deployed GPUs. Nvidia could simply pull out of Europe completely. Europe doesn’t really matter in compute. https://lnkd.in/eRCZnaCR

"By 2030, around $10.6tn of wealth will have been transferred between the generations in the US, $3.5tn in Europe and $2.8tn in Asia." So much change happening in the family office space right now as Boomers retire/die. That pace of change is only going to accelerate. More than £100bn is now inherited and gifted in the UK each year. That number has been doubling every 20 years. 70% of wealthy families lose their wealth by the second generation, 90% by the third. https://lnkd.in/eAUbNKhd

LPs who want and/or need liquidity investing in a highly illiquid asset class. 🤷🏼♂️ It never ceases to amaze me how many LPs, from family offices to endowments, don't understand how venture works as an asset class. Do your homework before you allocate. Happy Monday!

“Venture distribution cycles have elongated to the point that LPs now risk a decade of negative cash-flow on many of their VC relationships. That's not sustainable for institutions with large spend requirements, such as a university endowment.” A lack of liquidity in VC is proving to be a major issue for some endowments. There are plenty of medium sized endowments who went full in on the Yale model, but have a lot more concentration risk due to size. That’s a tough game to play when you have required outflows. https://lnkd.in/ewkhEDSi

When a VC is trying to convince themself that a startup using commoditized tech is actually doing something innovative.