Doug Leone, Global Managing Partner of Sequoia Capital, delivered a speech on the second day of TechCrunch Disrupt SF 2018 held at the Moscone Center in San Francisco, California on September 6, 2018.
Steve Jennings | Getty Images
LONDON – Several industry sources told CNBC that some of the most successful venture capital firms in the United States have found it difficult to recruit talent to lead their new outposts in Europe.
U.S. venture capital giants including Sequoia Capital, Bessemer Venture Partners, Lightspeed Venture Partners, and General Atlantic have all opened new European offices or started significant expansions in the past 12 months.
Hussein Kanji, co-founder of the British venture capital firm Hoxton Ventures, told CNBC that large US venture capital firms have found that hiring the right people in Europe is “super, super difficult”, adding that there are only a few notable Appointment.
“There are very few well-trained general partners in Europe,” he said. Kanji said that a key difference is that US venture capital tends to focus on growth, while European venture capital is more likely to prioritize reducing or eliminating risks.
To some extent, American venture capital is also competing with companies such as SoftBank, whose Vision Fund is headquartered in London. Elsewhere, hedge funds such as Tiger Global and Coatue are also expanding in London.
Kanji said that US venture capital companies want to hire technology investors they have worked with on the board of startups before, and they generally don’t like hiring strangers.
Another venture capitalist who requested anonymity because they worked for a US fund that recently expanded to Europe told CNBC that the “venture investment profile” that many US funds like is not common in the European sector.
They added: “It’s not that talent doesn’t exist because it obviously exists, but that people are targeting a narrower candidate pool.”
According to sources, top investors will not “just spend two years in a startup after a McKinsey or Goldman Sachs MBA preparatory course, then get an MBA at Harvard and become a venture capitalist.”
In March last year, Menlo Park-based Sequoia Capital hired Luciana Lixandru from Accel as its first partner in Europe. Accel, which has an office in Palo Alto, supports several companies in Sequoia’s portfolio, including Dropbox and Qualtrics.
“I think Sequoia has done a great job hiring Luciana,” Blossom Capital co-founder Ophelia Brown told CNBC, adding that not many venture capital companies in Europe have a “growth-oriented mentality.”
“It is not easy to find such talent in Europe,” she added. “This is what the U.S. Fund is realizing.”
Elsewhere, Menlo Park-based Lightspeed hired Paul Murphy from the early-stage venture capital firm Northzone to lead its European outpost in London. Murphy led Northzone’s investment in the virtual event startup Hopin. Although the company was founded less than two years ago, it was recently valued at $7.75 billion.
Alex Lim, who left San Francisco venture capital firm IVP this summer and joined London Blossom Capital as a managing partner, said that Lixandru and Murphy are the only two well-known employees of American venture capital firms in Europe.
Kanji added that when suitable candidates do appear in Europe, American venture capitalists are willing to pay a high premium. Another CNBC source said that a technology investor in a London-based American venture capital firm may earn approximately $1.5 million a year. He requested to remain anonymous due to the privacy of the discussion.
Compared with the United States, the venture capital industry is relatively new in Europe, and the situation in the United States has changed since the early days of the Internet.
In other words, the European venture capital industry has made considerable progress in recent years. Ten years ago, there were only a few venture capital funds and about 100 technology investors in Europe. Fast forward to today, there are thousands of venture capital professionals in Europe, but many of them have only been venture capitalists for a few years.
Harry Briggs, a venture capitalist at Omers Ventures, told CNBC: “The European venture capital ecosystem 10 years ago was very small, so there were relatively few venture capital firms with more than 5 years of experience.”
“However, thanks to the success of Spotify, Adyen, Just Eat, and Revolut, more operators now have the experience of expanding their business to thousands of people.”
One of the operators is Jambu Palaniappan, who led UberEats internationally before joining Omers Ventures as a managing partner this month.
But Lin said people from operational positions need some training, and many American venture capital firms will look for people who can “immediately succeed.”
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