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Unprecedented amounts of capital were invested globally as well as in Europe in the first quarter of 2021, per 附近上门 data.听

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As such, I thought it would be valuable to sit down (via ) with founder , a serial founder and prior executive at , and a seasoned investor in Europe, to get his point of view.

Klein, who chatted with me from his office in London, previously co-founded with in 2007 and was a partner at from 2007 to 2015.

鈥淓veryone has discovered that Europe is not a frontier market. It’s an emerging market and might be a real market,鈥� said Klein.

Klein predicts that Europe will continue to increase its size of the pie. In 2010, there were eight unicorns in Europe. Currently, per 附近上门 data, there are on the continent, half of which have joined the board just since the beginning of 2020.听

LocalGlobe recently closed on two funds, a seed fund XI of $150 million and its second latitude fund of $220 million, to further invest in breakout companies.

Equity in private companies

鈥淚f we think there’s a lot of capital in the private markets today, we haven’t seen anything,鈥� said Klein.

鈥淐ompanies are staying private longer, and will continue to do so because there’s so much money still available in the private markets,鈥� said Klein who predicts this 鈥渋s only going to grow.鈥�

He cites a report that found 鈥渆very 1 percent shift in asset allocation from public to private equities represents about $390 billion in assets. For context, the commitment to U.S. buyouts and venture capital were approximately $315 billion in 2019.鈥�

Klein points out that 鈥渁 1 percent shift is the entire U.S. venture industry. So that’s not a question of if, but when.鈥�

Growth capital in Europe is from outside

Leading U.S. venture investors have set up offices in London in recent years, including , and .听

There are strong ties between European and U.S. venture capital. has been active in Europe for more than 20 years and has a current private company portfolio of 87 companies. By contrast, Sequoia, Lightspeed and Bessemer have fewer than 20 private European portfolio companies each.听聽

We have also seen the reverse. For example, Geneva-based set up a U.S. office in 2011.听

Still, European late-stage or crossover investors are still not coming to the party, with some exceptions, according to Klein. Those include , (which created a more than $7 billion private markets fund), , and .

For Europe, most of the scale-up capital is international, but it’s not just the U.S., Klein said. He cites growth investors from around the globe, like U.S.-based firms , 听补苍诲 , Canada-based , Singaporean firms and , China-based , Tokyo-based and from the United Arab Emirates.听

鈥淚f you’re a founder, or if you’re a VC, it doesn’t really matter if the growth rounds are being led by or Temasek,鈥� he said. 鈥淏ut what it does mean is that when these companies are successful, and they have liquidity events, the beneficiaries are not U.K. savers, they’re not U.K. pension funds, they’re not U.K. insurance companies.鈥澛�

That means, he said, 鈥渢he people who really benefit are not going to be the broader economy 鈥� it’s just going to be the founders, the VCs, the bankers, the lawyers.鈥�

For example, if a company like goes public, 鈥渋t doesn’t matter if they’re going public in London or New York, because the beneficiaries are not going to be U.K. savers,鈥� he said.

Much of the allocation has gone to U.K. equities. Klein noted that when you look at the FTSE Index, it has stayed flat over two decades. That contrasts with the and the , which have seen the biggest gains accrue to growth technology stocks.听

鈥淎 lot of the challenge that we still have here is around educating,鈥� said Klein. Investors in the U.K. are not educated on valuing intangible assets like software, he said.听

Often investors there ask questions like, 鈥� 鈥楬ow can this be valuable? They don’t have factories, they don’t have stores, they don’t have inventory, they don’t have machinery. These aren’t real businesses,鈥� 鈥� he said.

LocalGlobe

Klein and his father founded LocalGlobe in the early 2000s. Since 2015, the firm has reinvented itself, with close to $1 billion in funds raised since that date. The firm now has six general partners and a further nine investment professionals from associate to partner along with other operational team members.听

It also has an office and events space called Phoenix Court, in one of London鈥檚 poorest areas in Somers Town in the borough of Camden. The firm is active in its community: It works with the local council in Camden and partners with the local primary school and local high schools to provide support to students.

The span for LocalGlobe鈥檚 investments covers a wide area, with many cities a four-hour train ride from its location, which is close to both Kings Cross and Euston stations and connects the firm to centres like Oxford, Cambridge and Manchester in the U.K. as well as Paris, Amsterdam and Brussels.听

LocalGlobe will also invest outside of that radius, but believes early-stage investing requires a high-touch experience that鈥檚 helped by physical proximity. The firm has invested in microprocessor in Bristol, biotechnology company in Oxford, account payables company in Paris and London-based car insurance provider .听

鈥淚n 10 to 20 years time you’re going to get a whole new different type of investor,” Klein said. “And the commonality will be a growth mindset, an ability to understand how to value intangibles, including, by the way, founders, which is the ultimate intangible.鈥�

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