Venture Capital/Analysis/ Lightspeed’s Europe plans Sequoia isn’t the only US VC betting big on Europe By Amy Lewin 16 February 2022 The Lightspeed Europe team The Lightspeed Europe team \Venture Capital Speedinvest starts €3m fund of funds programme to back emerging managers By Eleanor Warnock 17 February 2023 Venture Capital/Analysis/ Lightspeed’s Europe plans Sequoia isn’t the only US VC betting big on Europe By Amy Lewin 16 February 2022 Since Paul Murphy joined Lightspeed from Northzone six months ago, he’s been pretty busy. The Silicon Valley-based VC firm is now averaging two early-stage deals per month in Europe and it’s poached its second European partner: Julie Kainz, previously at Dawn Capital, who joined in January. Announced investments include speedy pharmacy delivery startup Mayd, in-game audio ad startup AudioMob and, just this week, participation in a $116m round into games company Tripledot Studios, giving it a $1.4bn valuation. Still, there’s plenty of work to do. Lightspeed needs to hire a handful more people on the ground in Europe if it’s to compete with fellow US VCs like Sequoia and General Catalyst, which are both building big teams on the continent and investing earlier and earlier. It also needs to get the word out that it’s interested in early-stage deals in Europe, make investment decisions faster than ever and establish the kind of brand that means it gets to see deals before everyone else. Lightspeed’s goal “We want to be the most sought-after fund for the best founders in Europe,” says Murphy. (No small task, then.) “We don’t want to be seen as a sourcing engine for a US team — the people we recruit and the deals we do will be led in most cases from Europe.” “Most founders raising growth capital know Lightspeed,” claims Murphy. (The VC has deployed $500m into European startups to date, and all investments come out of the US funds.) “We’ve been one of the few US Tier 1 growth funds active here.” “The education that we need to do with founders is to say, ‘We play early stage now’.” “We play early stage now” For now, the Lightspeed team in Europe is small: Murphy, formerly a partner at Northzone and founder of mobile game studio Dots; Kainz; Adrian Radu; and Rytis Vitkauskas, a former investor at Target Global who’s been investing on the ground since 2019. His portfolio includes speedy grocery delivery company Zapp, HR tech platform Personio and secondhand clothes marketplace Vinted. Nicole Quinn, a partner based in San Francisco, “comes back and forth”; she’s a board observer at London-based edtech startup Multiverse. That makes it pretty tricky to cover the entire early-stage landscape in Europe. “It’s tough to do with a relatively small team,” says Murphy. “The strategy there is to be thoughtful about the founders we spend time with and try to resist the FOMO that drives a lot of VCs.” If Murphy’s lucky, that means he’s already got to know a promising founder before they look to raise. Case in point: “We signed a deal last week which was very competitive — most European funds were competing on it and a handful of US funds too — but we’d started speaking to them in September, before they were thinking about raising money. That’s one of the reasons we won that deal.” Hiring that team American VCs have been on a shopping spree in Europe these past few years. And they haven’t just been looking for startups — they’ve also been looking for people. First, Sequoia snatched Luciana Lixandru from Accel to head up its London office. And then Lightspeed poached Murphy from Northzone. Over the next few months, General Catalyst hired Chris Bischoff from Kinnevik, while Sapphire Ventures also continued growing its Europe team, promoting Annalise Dragic, formerly an investor at Atomico, to partner. Last month, another steal was announced: Reid Hoffman’s firm, Greylock, had landed DeepMind founder Mustafa Suleyman as its first European partner. But these courtships tend to be long. “It’s tricky — but I think it’s always been tricky,” says Murphy. “Pre-2021 funds used to obsess about which startups to invest in — but that pales in comparison to which people they should bring into the fund. “At Lightspeed, everyone is a partner — everyone is writing cheques and making decisions — so you need to be at the top of your game.” “The driver is usually, what can I do on this platform? Can I find the best companies? Will they call because of the brand, or do I have to go out and hunt them all?” Firms also need to be top of their game: it’s not just US VCs on the hunt for partners (especially female partners) at the moment. “It is challenging. So many great funds are searching for partners and the ecosystem is so small that it’s very hard — everybody has the same list of people,” says Carmen Rico, angel and founder at Cocoa. Sifted spoke to another VC who points out that as the European ecosystem is still young — and currently booming — many partners don’t want to leave their boards (or carry) behind at their current firms. There’s also a concern that US firms might not be truly committed to Europe and might not stick around for the long term, and that working far from US HQ could throw up challenges. Murphy thinks it’s also about the platform a new firm will offer an investor. “For senior hires coming in laterally, compensation is always important — but it’s never the driver. It’s a hygiene factor. The driver is usually, what can I do on this platform? Can I find the best companies? Will they call because of the brand, or do I have to go out and hunt them all? Do I have the right resources in the fund to evaluate the deal and, if we win the deal, support the company?” The Lightspeed model Like most big US VCs, Lightspeed also has a full-platform offering — talent partners, marketing and PR guidance — and its team has a big network, promising introductions to expert operators all over the world. In Europe, the team is writing cheques all the way up to IPO, starting from a “couple million” at pre-seed. Traditionally, Lightspeed has focused on enterprise software, fintech and data, and is hoping to hire more partners focused on these areas — and gaming. Kainz is focused on B2B enterprise software and fintech, industry and infrastructure, while Murphy has been “looking at companies that touch on productivity and the future of work, that have a SaaS business model but are built by consumer teams”. When it comes to the much-hyped topic of the metaverse, he says the team are “believers” — and looking to do much more in Web3 and crypto too. “I very much believe — put whatever Facebook did to the word ‘metaverse’ aside — that a lot of real software is being built to solve very real problems people have.” Amy Lewin is Sifted’s editor. 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