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Private wealth is main capital fuel for startups

By Ashley Norris

Cash-rich young entrepreneurs keen to invest their money in the tech sector, according to research

Private wealth has maintained its position as the leading source of capital for startup companies, according to research published today by Dealroom.co for Talis Capital.

Apparently, over a fifth of fundraising by European VC firms in 2018 came from family offices and private individuals, as opposed to institutional money from asset managers, government agencies and corporate investors.

As many as 92 per cent of ultra-high net worth individuals, who have over $25m (£19.2m, €22.5m) in investable assets, invest in venture, which is up from 50 per cent a decade ago.

The research, which used data from CapGemini, Forbes, Bloomberg, UBS, Wealth-X and KKR, highlighted how recent exits from European tech firms, such as Spotify and payments platform Adyen, have created a breed of wealthy young tech founders keen to invest their capital in the sector. According to the report this has created a snowball effect, with younger generation persuading previous generations that this is where they should be investing.

“They want to create strong legacy investments and work with exciting smart startups that can improve our world for the better,” said Talis Capital co-founder and managing partner Matus Maar. “Key areas include health technology, sustainable farming and food production, mobility and climate change.”

The ongoing investment was also recently highlighted by venture capitalists Atomico in its ‘State of European Tech’ report. It calculated that startups in Europe have raised $34.3bn in venture capital since the start of 2019. The major investment rounds were in fintech companies, with start-ups in the space raising over $9bn.

Although the UK has traditionally lead the way in fintech investment (with over $2bn invested in London-based businesses across 114 deals in the first eight months of 2019), this year’s biggest deals include German bank N26′s $470m Series D round and Swedish payments firm Klarna’s $460m equity raise.

In the latest big fintech deal Hastee, a London-based on-demand wages app, announced this morning it has secured about $270m in equity and debt financing.

FURTHER READING: London’s fintech sector attracts record levels of US investment in 2019

FURTHER READING: SoftBank records $6.5bn losses following bad investments

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