European Venture Capital: A Growing Force or Still Behind the US?
The notion that European venture capital (VC) lacks the firepower to compete with its US counterparts has been a persistent theme in recent years. However, a recent development in Berlin may suggest otherwise. Cherry Ventures, a Berlin-based VC firm, has closed its latest fund at a significant $500 million, with plans to split the funds between early-stage rounds and follow-on rounds at Series B and beyond.
A statement from Cherry Ventures outlined its ambitious goals, aiming to help build the “first trillion-dollar company in Europe.” This move is seen as a bold attempt to reverse the “doom and gloom” narrative surrounding Europe’s economy. While this is a commendable effort, the question remains whether European startups are truly on the trillion-dollar path.
Currently, evidence of European startups reaching this milestone is scarce. For instance, recent research estimated that AI companies in Europe raised a mere $8 billion in 2024, compared to the $97 billion raised in the US for AI startups. The disparity in funding is not the only issue; capital is a critical component of a startup’s success, and European VCs are aware of this.
Cherry Ventures did not provide a timeline for its aspirations, leaving room for speculation. In the UK, the largest startup market in Europe, venture capital funding for UK startups declined by 50% in October, with only around $2.9 billion secured, according to a report by Dealroom and HSBC Innovation Banking.
Cherry Ventures itself did not even appear in last year’s HEC-Dow Jones Venture Capital Performance Ranking, with Earlybird Digital East Fund taking the top spot. Meanwhile, Revolut backer Balderton Capital recently managed to raise $1.3 billion for European tech startups, while acknowledging that Europe is missing out on the AI boom.
Cherry Ventures’ last fund, announced in early 2022, came in at €300 million ($312 million). The VC’s portfolio includes notable companies such as space-tech The Exploration Company, grocery delivery startup Flink, neurosurgical microbots company Robeaute, Greyhound owner Flix SE, and logistics unicorn Forto.
The new fund’s limited partners include entrepreneurs Miki Kusi from Wolt, Ilkka Paananen, chief executive of Supercell, and Jochan Enghert from Flix. Cherry Ventures has a history of successful exits, with 18 exits including CoWSwap, Ninetailed, and Homelike.
While Cherry Ventures’ efforts are commendable, the question remains whether European startups can truly reach the trillion-dollar mark. Only time will tell if this VC firm’s ambitions will be met with success.
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