General Catalyst Forges Partnership with German VC in European Tech Expansion

17 Oct, 2023

General Catalyst Forges Partnership with German VC in European Tech Expansion

Silicon Valley's General Catalyst is expanding its presence in Europe, forging a partnership with Berlin-based La Famiglia. This strategic move reflects General Catalyst's belief in the resurgence of the European technology investment landscape.

The merger involves General Catalyst, a US-based venture capital giant, joining forces with La Famiglia, renowned for its investments in high-profile early-stage European startups, such as generative AI company Mistral and defense group Helsing. La Famiglia has attracted an array of prestigious investor backers since its establishment in 2016.

General Catalyst, managing $25 billion in assets, is collaborating with La Famiglia, which handles approximately $360 million. The details of this merger are currently being finalized, with the deal slated for completion in early 2024, according to sources familiar with the matter.

La Famiglia recently secured over €250 million to invest in early-stage startups. Their backing includes family offices and companies associated with notable brands like Swarovski, Adidas, and Estée Lauder, along with support from prominent entrepreneurs, including Skype co-founder Niklas Zennström.

General Catalyst, one of the largest venture capital firms in the United States, has been active in European investments for over a decade, contributing to notable startups like Helsing and travel search engine Kayak. In 2021, the firm inaugurated a London office as part of its European expansion.

The rationale behind General Catalyst's partnership with La Famiglia lies in the Berlin-based firm's proficiency in seed-stage investments, particularly in the very early stages of a startup's development. This hands-on, localized approach enables close interactions with founders and in-depth market insights, as highlighted by General Catalyst's Chief Executive, Hemant Taneja.

Taneja stressed the importance of seed investing as a localized endeavor, highlighting that it necessitates a close connection with founders, a capability that La Famiglia provides.

Upon the merger, partners from the German firm, including co-founder Jeannette zu Fürstenberg, will become integral members of General Catalyst's investment team.

Jeannette zu Fürstenberg, a hereditary princess from a distinguished family of German industrialists associated with the technology company Krohne Messtechnik, underscored Europe's long-standing tradition of innovation and its evolving capacity to capitalize on its inventions.

Europe has given rise to several prominent startups, including Revolut, Klarna, and Spotify, attracting the attention of Silicon Valley's leading players. Notably, Andreessen Horowitz is planning to establish its first office in London this year, joining other prominent venture capital firms such as Sequoia Capital, Accel, and Bessemer Venture Partners. U.S. investors have exhibited growing interest in European venture deals, with investments reaching €51 billion in 2021, compared to less than €3 billion in 2011, according to PitchBook.

However, the European tech investment landscape faced a significant decline in the past year due to global investment deceleration. Several highly valued European startups encountered challenges, including substantial valuation adjustments. Klarna's valuation, for instance, dropped from $45 billion to $6.7 billion, while the valuation of food delivery app Getir plummeted from nearly $12 billion to $2.5 billion. Key assets of virtual conferencing company Hopin, valued at almost $8 billion during the pandemic, were sold for just $15 million earlier this year.

Venturing into the European market brings additional intricacies for American companies, given its diverse and dispersed nature. Market-specific expertise is essential, as emphasized by a partner at a U.S. firm with a notable European presence, who highlighted the complexities and nuances involved in navigating the European landscape.