Cherry Ventures Raises $500M Fund: Is It Enough?

European VC Funding and Cherry Ventures' New $500 Million Fund

A common perception exists suggesting that venture capital firms in Europe lack the financial resources to effectively compete with their counterparts in the United States, where billion-dollar funds are frequently raised. Recent news regarding Berlin-based Cherry Ventures’ latest fund closure at $500 million may reinforce this viewpoint.

Fund Allocation and European Ambitions

The newly raised capital will be distributed across both initial investment rounds and subsequent funding stages, including Series B and later-stage opportunities. Cherry Ventures has publicly stated its goal: to facilitate the creation of Europe’s first trillion-dollar company.

This ambition is coupled with a call to challenge the prevailing pessimistic outlook concerning the European economy. The firm believes in the potential for growth and innovation within the region.

The AI Investment Gap

While optimistic, concrete evidence of European startups currently positioned for trillion-dollar valuations remains limited. Especially considering the rapid development of Artificial Intelligence, a significant disparity in funding exists.

Recent data indicates that approximately $8 billion was invested in AI companies across Europe, in contrast to around $97 billion allocated to AI startups in the U.S. Although funding isn't the sole determinant of success, it is a crucial component.

UK Venture Capital Trends

In the United Kingdom, Europe’s largest startup market, venture capital funding experienced a substantial decline in October. A report by Dealroom and HSBC Innovation Banking revealed a 50% decrease compared to the previous quarter, with startups securing roughly $2.9 billion in funding.

VC Performance Rankings

Cherry Ventures was not featured in last year’s HEC-Dow Jones Venture Capital Performance Ranking. Bek Ventures, previously known as Earlybird Digital East Fund, secured the top position in the ranking.

Balderton Capital and the AI Boom

Balderton Capital, an investor in Revolut, recently raised $1.3 billion for European tech startups. They also acknowledged that Europe is currently missing out on the substantial growth within the AI sector.

Cherry Ventures' Portfolio and Previous Fund

Cherry Ventures’ prior fund, announced in early 2022, totaled €300 million ($312 million). Their investment portfolio includes companies such as The Exploration Company (space tech), Flink (grocery delivery), Robeaute (neurosurgical microbots), Flix SE (Greyhound owner), and Forto (logistics unicorn).

Limited Partner Support

The new fund benefits from investment from prominent entrepreneurs, including Miki Kusi (Wolt), Ilkka Paananen (CEO of Supercell), and Jochen Engert (Flix).