European Growth PE is maturing and a segmentation has emerged
European Growth PE exists at the intersection of venture capital and traditional private equity. It combines organic value appreciation and fast growth as typically seen in venture capital with a degree of scale and stability more common in traditional private equity. Today, European Growth PE funds account for 17% of overall annual European private equity fundraising, compared to 5% only five years ago. European Growth PE is clearly emerging as a third, strong private equity investment strategy between the venture capital and the buyout business.
The scale of the growth market allows players to find ample opportunity even in its…
These were some conclusions when, in September 2020, we were privileged to spend 1.5 days off-site and in person with many of our limited partners. One inevitable topic was how the pandemic has changed technology investing.
The pandemic has made technology the new safe haven for investment
The global economy is in what could well become the deepest recession of our lifetime. The lock downs around the world in the first half of the year have slowed the economy in most countries by typically 10–20% and for the full year we are anticipating several percentage points GDP decline for the global economy. …
No one can tell yet what the impact of Covid-19 on our health, our society and our economy will be. Without doubt it will have a tremendous impact on European technology. However, we believe companies and investors will emerge stronger than before.
Covid-19 will likely push the global economy into recession
In order to suppress the virus and to flatten the curve of infection public life in Europe and elsewhere has been paused since mid-March. Large parts of the economy have stopped operating or slowed down substantially which will push the economy into a sharp recession. At this point, it’s not clear how long the recession will last and how quickly the economy will recover. It can be short-lived, but it might well be a recession as severe as the Global Financial Crisis in 2007–08.
Certainly, this recession will have a tremendous…
The US funds’ foray into Europe is in full swing as Pitchbook’s data shows: Participation of US funds in European venture deals has grown from 8% in 2010 to 17% for early-stage deals and 23% for late-stage deals in 2019:
In September 2019, French President Emmanuel Macron announced €5 billion for French start-ups. This has been unprecedented, but we believe it’s only the beginning of sustained growth of European technology investing.
Technology investment in Europe is unreasonably low
Technology investment in Europe has been growing at a good pace since the financial crisis in 2007/08. However, if you compare countries’ technology investments as a percentage of GDP all European countries are lagging far behind the global leaders, USA and Israel:
In 2003, when Cipio Partners started investing we pioneered in Europe what was soon called secondary direct transactions. Today, we feel we have established a new level of liquidity into a formerly illiquid asset class.
From cradle to exit
In 2003, when Cipio Partners started investing, the prevailing attitude among tech investors was that fresh capital was to be used to grow the business, not to buy shares from existing shareholders. As a result, shareholders of early and growth stage technology businesses had to stick around until the ultimate exit of the company. Once invested in a company one really…
Cipio Partners
European Growth Capital and Minority Buyouts for Technology Companies. Read more at: www.cipiopartners.com
