The European LP Gap
What can we learn from the 20 biggest LPs who invested in the best performing VCs?
8 of the 20 largest LPs are pension funds. 7 from the US and 1 from Canada. Overall Pension funds with total of 657 VC investments. Next are 5 Funds of Funds 4 US based and 1 in Israel did 557 VC investments. The rest are foundations, endowments and even a corporate (MetLife).
Here are my main 3 takeaways:
No European or British LPs on the list
18 out of the 20 biggest LPs are based in the US, 1 is Canadian and the other is Israeli. Not a single one is European! When we talk about the European VC ecosystem today I definitely see bolder investors and larger deals, there is a huge appetite. However, we also see consolidation of the mega-funds which are US based like at Thrive, a16z and General Catalyst. We do not think about the consolidation of LP money to only US investor which eventually funnel their capital to US funds. Europe must create and build more Limited Partners that invest in successful VCs. That might be the core of the European risk capital change we need in order to make the UK and EU venture market compete.
Israeli Startup Nation has startups, VCs and LPs
Vintage Investment Partners founded Alan Feld is an amazing example of how Israel as the Startup Nation and one of the thriving startup ecosystem was able not only to generate some of the greatest startup deals like Wiz with its $30b acquisition by Google, but also a healthy investment vehicle in funds. Vintage, was able to give access not just to some of the best deals but also to the best funds and when we look it from a system view, the best way to build a thriving and growing ecosystem is to provide access for investors across startup deals, funds, GPs and LPs which all play the Power Law game.
European and British University Endowments should invest in entrepreneurship
When I look at the other categories which invest in the venture class like foundations and endowments the appetite for risk is clear. I found a list of at least 44 endowment funds in top European universities. If we think of an economic growth perspective, European universities are the home of some of the greatest research and technology talents today in the AI, bio and science space. If we think about building and prioritizing more VC money to support entrepreneurial talent coming from academia in Europe the return would be immense. The idea of getting access to those fund managers investing in graduates of building ventures in Europe is a circular view of capital, talent and ideas that could bring an economic change in the AI era.
What are your takeaways?
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