ALLOCATE 2020: The Evolution of European Venture Capital

ALLOCATE 2020: The Evolution of European Venture Capital

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Originally Published on the Silicon Roundabout community blog

At the end of last year, a single virtual conference run entirely by volunteers attracted over 300 people from the European venture capital ecosystem.

It all actually started in 2019 in a London old theatre (and after-party pub visit). There took place the first, intimate and yet extremely successful edition of ALLOCATE. The first ever GP-LP pitching and networking conference in Europe dedicated exclusively to emerging VC funds and the investors who want to back them.

Come November 2020 and the virtual 2nd edition becomes a Global success, with LPs from all over the planet come to hear the pitches of emerging European managers.

If you are in Venture Capital, either as a new operator, an LP investor, or a service provider, ALLOCATE is probably a community and event you should track.

From being the first event of its kind to be held totally online, to its refreshing emphasis on transparency, and to the amazing diversity of participants, ALLOCATE2020 marked a milestone in the evolution of the European venture capital industry. One that potentially marks a crucial turning point for European deep tech startups.

I was there. In fact I was there wearing two hats: 1st as its co-organiser and platform tech lead; 2nd as a GP pitching our new community-driven and engineer-led Seed Fund.

If you want to know what happened and what you missed, then: sit back, relax, and read on!

Bringing It On(line)

In a number of ways, the event had the feel of a new product launch.

Everyone looked forward to it but no one was quite sure what to expect.

To begin with, ALLOCATE2020 happened in the middle of a global pandemic. And so, staging an event that hopes to connect people seems antithetical to the urgent need to keep people apart. Of course, this year’s event was conducted entirely online, through Hopin’s virtual venue platform. So that concern was addressed, at least. There was no other way for it to happen unless it was online.

But being online was, in itself, a big question mark. Could the technology sufficiently simulate the experience of a live event?

From the experience of having attended both the in-person and the virtual editions, I think not. At least, not fully.

Of course, the most evident issues are the very same ones that plague all online communication channels. Latency and connection glitches pervaded all throughout the event. These are not showstoppers, of course, but could be annoying especially when they happen in the middle of important content being presented. Audio was also somewhat an issue with a few presenters. Again, audio quality was not a showstopper, but it does affect the clarity of the messages being communicated.

The online event also lacked the energy that usually permeates when a great presentation happens in a room full of people. Consequently, many of the presentations tended to be “vanilla.”

In a live event, much of the activity is fuelled by side conversations among participants. Alas, such serendipitous opportunities are difficult, and maybe impossible, to duplicate in a virtual event. Hopin actually had a feature to jump into random 1-2-1 chats with other participants, which was great. Yet it took a while for people to get the hang of it and only at traits it achieved its purpose of simulating random event side chats.

Now, this is not to say that the event lacked any substance or value.

On the contrary, the innovations of the ALLOCATE events are helping to transform what was once a static and unremarkable VC industry into one that is dynamic, more risk-tolerant, and pulsating with possibilities.

Perhaps other participants may perceive otherwise, but it also seems that the linear orientation of online events may even have helped people focus more on the presentations and what the speakers were saying.

Diversity Makes a Difference

Another important distinction of this year’s gathering is its notable diversity. It featured what is arguably the most divergent mix of participants to ever grace an event of this standing and magnitude.

Attendees logged in from all corners of the globe. We saw an encouraging number of women take part. There were people from diverse ethnicities and various technical and non-technical fields of expertise.

Such heterogeneity helps us realise a dynamic and inclusive ecosystem. It brings to the table the vital cross-pollination of ideas. It offers an abundance of perspectives that could help formulate novel solutions to problems that continue to challenge industries. It’s the concept of optimisation rendered in 3-D and stereo in the living world. It boosts the European startup ecosystem toward higher planes of performance and trajectories previously unimagined.

##The Rise of the New Manager Of consequence, too, is the opening of an immense floodgate that allows non-traditional fund managers to come in from outside and become players in an economic ecosystem that is slowly but surely bubbling over with immense possibilities.

This is, perhaps, what we ought to celebrate the most. European investment ecosystems have traditionally been conservative, exclusive, notoriously unresponsive to change, and dominated by bankers.

As Ertan Can of Multiple Capital remarked, “The VC ecosystem globally is very intransparent. Having a modern GP-LP event like ALLOCATE helps to bring transparency into the ecosystem. And I love the idea of emerging VCs pitching their funds.”

Like diversity, the influx of emerging fund managers breaks the stranglehold of the homogeneous traditional investment funds. It levels the playing field and brings an especially important ingredient to the table: tech expertise.

It’s a major effort for traditional fund managers to get excited about new technology.

For one, they most likely do not understand it. How, then, can they appreciate its impact on the economy or on humanity?

Second, traditional managers are conditioned to look for and favour concepts that have already proven that they can generate revenues and profits. Nothing about first-stage deep tech, where revenues are almost never expected in the short term, appeals to them.

But for the engineers, scientists, healthcare, and other managers not part of the exclusive bankers’ circle, technology and its infinite possibilities are enough to be excited about.

Their entrance into the playing field transforms the “old boys club” atmosphere of European venture capital into one that more closely resembles the wild and exciting vibe of Silicon Valley.

Let’s not forget the founders. For many of them, ALLOCATE 2020 is an immense resource that helps them extend their limited reach. After all, where better to find funding and support than where investors and fund managers gather? The value of such an event is tremendous for startups. Especially when it offers the benefits just enumerated above.

Navigating the startup playing field is a challenge in itself. It can get the better of all but the most intrepid of founders. Imagine the difficulty of pitching the business to impassive fund managers who probably don’t understand much of it in the first place. But ALLOCATE changes all that.

The emerging crop of tech-savvy investors and fund managers alters the complexion of the startup ecosystem. They are more prepared to understand and appreciate the prospects of first stage deep tech.

A Recipe for Deep Tech Startup Success

ALLOCATE 2020 is like a pot where all the ingredients for a potent startup success secret sauce are mixed in — a changing of the guard in favour of emerging, tech-savvy fund managers, diversity of perspectives and approaches, and technology that allows founders to link up with investors and collaborate with other stakeholders even in the midst of a global pandemic. This is precisely what the European deep tech startup ecosystem needs to energise itself and recover its momentum.

Some time ago, I wrote about how investors seemed to be shying away from early seed stage tech ventures. I also pointed out how this could affect the economy adversely, should it continue. The way to overcome the torpor forced upon us by the pandemic is to increase investments in deep tech startups. Hopefully, ALLOCATE 2020 energises the ecosystem and gets investors to start investing.