A European early-stage investor who backed 3 buzzy unicorns going public this year says a Silicon Valley rolodex is key to picking future winners
- Hoxton Ventures wrote early checks for three European unicorns that will go public this year.
- Partner Hussein Kanji believes being able to pick up the phone to Silicon Valley is crucial in Europe.
- A record €45.3 billion ($54.7 billion) was invested into European startups by VCs in 2020.
- See more stories on Insider’s business page.
A rolodex of Silicon Valley contacts is key to picking top European startups, according to an early-stage investor who backed three unicorns going public this year.
Hussein Kanji is a partner at London-based venture capital firm Hoxton Ventures, which was founded in 2013 and wrote early checks for food-delivery firm Deliveroo, cybersecurity company Darktrace, and health-tech startup Babylon.
It’s a potential return that bigger operators in Europe could be proud of. Deliveroo and Darktrace completed multibillion-dollar IPOs in London this year, while Babylon has unveiled its intention to list through a $4.2 billion SPAC deal in the US.
Europe’s burgeoning tech sector has attracted increasing levels of venture capital investment in recent years, reaching a record €45.3 billion ($54.7 billion) in 2020, according to figures from Pitchbook. While it still pales in comparison to the $156 billion funneled into US startups last year, more top-tier VCs are opening up within the bloc.
Hoxton’s Kanji said the company’s ability to back successful startups in the region was down to its “rolodex” of contacts on the West Coast.
“If you think about it structurally in the UK or in Europe, there’s a tech industry that didn’t used to exist, that’s good,” he said.
“But it’s nowhere near as big as the industry in the US and the only information you get is predominantly UK or European news … so you’re kind of out of the loop on everything that’s going on in the Bay Area if you’re physically sitting in the UK.”
Kanji and his fellow Hoxton execs, Rob Kniaz and Rob Ludwig, have spent years working in the area and building contacts. The trio also regularly travel back and forth to the US to be part of the “news flow” and get access to conversations that he says are typically not reported.
The Hoxton partner said US-based cybersecurity experts gave the firm the steer to back Darktrace at an early stage. He said one of the few ways you can tell cybersecurity firms apart is by tapping other experts in the field for advice.
“Most people in the UK don’t have the ability to pick up the phone to call any of these guys because they don’t know who these people are,” he said.
“We spent the last 10 to 20 years in the Bay Area working with these folks before we came to Europe, so it’s easy for us to pick up the phone with a lot of our friends and colleagues.”
To date, Hoxton has raised to funds, most recently a $100 million fund developed to back fast-growth European startups.
Kanji said that there had been a “big argument” in Europe that tech firms didn’t need to worry about Silicon Valley.
“The French companies are a good example of this, where you have a bunch of unicorns that are very focused on the French market,” he said.
“20 years ago it would have been really hard to build a billion-dollar company in the tech industry in France but today you can.”
Kanji said that ambitions have changed and that the tech markets in Europe were “so much deeper” than they ever before.
“Your bar should be much higher, why would you want to settle building a billion-dollar company?” he said.
“The ambition level should be 10x in terms of what you’re building. And then if you’re looking to build a $50 billion or $100 billion company out of Europe, you want to win the US.”
The seed investor also predicted that high-profile VCs in the US will start investing more into Europe over the coming years. Sequoia has already announced its intention to open an office in the UK alongside General Catalyst and Lightspeed Ventures.
Kanji believes their arrival will be a good thing for Hoxton, which focuses on smaller checks, saying it will give Hoxton a “much bigger group” to fund their startups.
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