This article first appeared in Sifted’s Up Round newsletter, sign up here.
The lobby of the Hotel Palace in Berlin was buzzing with GPs and other investor-types taking meetings at SuperVenture this week — the holy grail of VC conferences. Amid the broader gloom around fundraising, there was a sense of uneasy optimism: VCs were trying to buck each other up about how much European VC has grown over the years, visualised in US fund-of-funds Adams Street’s annual presentation on the subject.
As I was searching for how best to describe the mood, one of my sources did it for me: it’s a “tale of two cities,” a secondaries investor said, as we crouched on two stools in the overflowing bar area of the lobby.
In one city, AI and defence — arguably the buzziest topics in VC right now — were all the rage, with investors talking up the opportunities.
“From where we sit…it feels like 80% of the market is AI-related,” Mel Williams, cofounder and general partner of US-based investor TrueBridge Capital, said on a panel.
Meanwhile one VC who’s raising a defence fund told me it’s easier to get initial conversations with LPs now. I also heard that a concurrent defence tech event, Mission 2044, was at one point more well-attended than SuperVenture.
But in that other city — the one VCs undoubtedly wish they could leave — there is the “DPI desert,” as the secondaries investor coined it, referencing the dearth of money paid back to LPs. It’s in turn made the fundraising environment consistently tricky for VCs; a theme that came up again and again in my discussions.
One example: when I asked how the vibe was around fundraising, one industry insider pulled up a WhatsApp group of SuperVenture GPs and showed me an internal poll asking how they felt fundraising was at the moment; the vast majority voted that it was pretty bad (“there’s not even a ‘good’ option,” the person joked).
“You don’t need to look very far in the data to see that the capital that is being invested is concentrated in a smaller number of larger funds,” Rob Greenwood, the senior director of fund investments at mega LP British Business Bank, told me on the sidelines of the conference. “I think it’s tightened across the board, and I think everybody is preparing themselves for a longer journey of fundraising.”
This has been a theme for what seems like a really long time now, and I wonder what will need to happen to finally shift it. Will VCs need to massively up their secondaries activity (as I hear they’re starting to), or push their companies to sell in order to pay back LPs and win the next cheque? Do we need to wait for the tariff and other geopolitical madness coming from the US to cool off and provide more certainty? Will we still be talking about this at SuperVenture next year too?
Some investors aren’t deterred: I discovered several VCs that are currently out in the market — including HV Capital, which kicked off fundraising for its latest, and tenth, fund this week. Who else is raising? Let me know.
Read the orginal article: https://sifted.eu/articles/vc-superventure-funfraising-ai-defence/
