London-based accelerator Entrepreneur First has raised $12.4 million in a round led by Greylock Partners. The startup, which closed a £40 million fund last year to invest in its alumni companies, also welcomes Greylock partner and LinkedIn co-founder Reid Hoffman to its board.
The deal marks an interesting point for VC investing trends—and for Greylock itself. The Silicon Valley-based firm has typically focused its investments in US, completing around 90% of its deals per year in its home country. Indeed, the percentage of yearly investments it makes in the US
has been steadily rising over the past several years, according to the PitchBook Platform:
Investments by Greylock Partners by region
What's more, the investment is another example of VCs backing companies that are looking to disrupt…VCs. A number of other accelerator programmes in Europe have also received VC backing this year. FinLeap recently raised a €39 million round, and some of new VC Accelerated Digital Ventures' first investments in 2017 included Techstars and Ignite, two UK-based accelerators.
Backing early-stage investors as an investor yourself is not as contrarian as it might seem. Supporting the stabilisation of early-stage startups by funding accelerators can help normalise a typically turbulent point in a young company's life cycle, namely by ensuring that startups adhere to the rules set out by accelerators. This makes them less unpredictable and a potentially safer investment down the line. Backing these accelerators can also lead to big paydays for VCs, too: Magic Pony Technologies, an EF alumnus, was sold to Twitter last year for $150 million after passing through the accelerator's programme.
The recent pivot of activity to Europe is also noticeable. Historically, early-stage investors such as Y Combinator and 500 Startups raised VC money with a clear US slant. Yet now might be a good time to take a closer look at investment opportunities in Europe. Both investors and capital-hungry startups appear to have taken a page from the US playbook, which in turn has led to a somewhat friendlier deal environment. Accelerators such as EF and Ignite might be looking to emulate Silicon Valley at early-stage backing.