Changing of the Guard - How Venture Capital is Evolving: Fireside Chat

Understanding Venture Capital & Private Markets

• 💡 Adams Street is a 50-year-old "fund of funds" that invests pension money into private markets, including venture capital and private equity.
• 🎯 Private markets typically represent a 5-10% allocation of pension funds, with venture capital (30%) focusing on early-stage, high-growth companies and private equity (70%) on mature, profitable businesses.
• 📈 Technology's pervasive impact has led to a collision of private equity and venture capital, as PE firms increasingly need to understand tech.

Evolution of European Venture Capital

• ⚠️ Europe's VC ecosystem had a challenging start, suffering from the dot-com crash hangover and initial capital loss, which created long-term negativity.
• 🌱 Despite early struggles, Europe has seen significant growth in startups and unicorns, with 680 unicorns across 71 cities today.
• 📊 While growing, the quantum of capital in European VC (around $40-50 billion in 2024) still lags behind the US ($150-200 billion).

Key Drivers for Success in Venture

• 🚀 Outlier companies are crucial, as only 10% of invested capital drives 100% of venture returns, making portfolio construction vital.
• 🌍 European companies must "go global, go quickly" and target the US market for scale, as demonstrated by the success of Israeli tech companies.
• ✅ Venture returns are uncorrelated to capital cycles and geopolitical issues; founders should prioritize building their business.

The Impact of AI and Ecosystem Growth

• ⚡ AI is a structural change that flattens the world and accelerates development, opening up new opportunities despite high valuations.
• 🧩 The challenge of startup to scale-up conversion in Europe is being addressed by increasing capital availability, though it's a gradual process.
• 💡 Founders should adopt a micro-level focus, building great global businesses and attracting capital, rather than relying on macro policy changes.
• 👏 Adams Street is doubling down on Europe with a new dedicated venture capital fund, reflecting confidence in the region's growth.