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🔥 Last week, we left out a vital trend, and it's about investor caution and the outlook for founders who they've already invested in

As we’ve analyzed previously, the VC world is only halfway until it unthaws. And Europe looks to be one of the first to come out of the snow. There were tentative signs of recovery in Q2, and there is hope for Q3 to end a year-long funding slump.

Thus, the value of European exits fell 93.2% in H1 2023 compared to 2022, and the deal value was down 60.8%. Sad numbers, but the good news is that venture capitalists have become much more consistent: they are not looking for exits and are doubling down on existing investments. About 70% of European rounds this year were follow-on.

VC exit activity. (Image: PitchBook)

Read what PitchBook thinks about this.

🔥 Given investor jitters and the geopolitical crisis, home markets may be a better bet for now

According to PitchBook's report mentioned above, American VCs are turning their backs on European companies. 

This trend is not due to a lack of potential in Europe (you know it is huge). Rather, it is because investors worldwide are generally less willing to take risks on cross-border deals. This is not surprising in light of the war-torn country reverberating through the region, the shaky global economy, and the collapse of the US banking system.

Whether this will be the new reality for decades or just a few years remains to be seen, but the trend toward deglobalization is already changing the venture landscape. Relying on international collaboration and access to global resources is ever more challenging. This makes local opportunities more attractive than ever: governments prioritize and invest in regional businesses, startups find widespread support and demand in their home markets, and investors feel more confident investing in a neighbor than in a faraway stranger.

Read what StartupBlink contributors think about this.

🔥 As European regulators continue to crack down on greenwashing, here is a list of genuinely green local funds

ESG is the coveted three-letter label that nearly every modern company wants. The European Union's Sustainable Finance Disclosure Regulation (SFDR) aims to separate the wheat from chaff. This first-of-its-kind law from 2021 obliges investors, private banks, and financiers in the EU to disclose and corroborate how their assets are in compliance with ESG principles. 

The law has been under revision due to existing incongruencies. Still, this allows us to compile a preliminary list of European VCs that are considered the safest according to the SFDR — a handy guide for ESG-minded LPs and GPs.

Read what Sifted thinks about this.

🔥 It's high time for VCs to consciously warehouse all the data — not just about ESG 

While some of the super-advanced big language models may have turned out to be not so advanced after all (we discussed this last week), there is no doubt that they will be of great use to the venture capital industry (read our long read on this).

Perhaps within a few years, every investor worth his salt will be armed with an AI network that tells him which projects to join and which to leave. And, of course, all of these services will absorb the same ocean of open data: round news, funder tweets, and regulatory statements.

Which begs the question: how do you win the race with twin hounds? One way is to stand out with your unique, non-public dataset. Correspondence with partners, startup pitch decks, financial statements, results from board meetings — all of it, right down to the post-it notes from the next conference call, will be your ace in the hole. 

Of course, this will only work if you start collecting, structuring, and preserving homegrown data today, while the rest of us get caught up in the power of open data. After all, only 1% of VCs can irrefutably be considered data-driven, so even minimal automation using open data gives a powerful boost starting today. 

But that's just for today. Things will change instantaneously, so you'd better play the long game and start collecting worthwhile insights. 

Read what Andre Retterath from Earlybird Venture Capital thinks about this.

Cover image: iStock