It’s often stated that European venture capital (VC) firms lack the financial strength of their U.S. counterparts, which regularly secure billion-dollar-plus funds. Reinforcing this view, Berlin-based Cherry Ventures has announced the closing of its latest fund, totaling $500 million. This capital will be allocated to both early-stage investments and follow-on rounds at Series B and beyond.
In a statement, Cherry Ventures outlined its ambitious goal to utilize this fund to build “the first trillion-dollar company in Europe.” This initiative seeks to reverse the prevalent “doom and gloom” narrative surrounding Europe’s economy. While the ambition is admirable, concrete evidence of European startups currently on track to reach the trillion-dollar valuation is limited.
For example, if artificial intelligence (AI) develops as predicted, only a few of the most well-funded companies in the field emerge from Europe. Recent research estimates that European AI companies raised approximately $8 billion, a stark contrast to the $97 billion raised by AI startups in the U.S. While capital is not the sole determinant, the importance of funding is recognized by Cherry Ventures and other VCs.
Cherry Ventures has not provided a specific timeline for achieving its aspirations. In the U.K., the largest startup market in Europe, venture capital funding fell by 50% from the previous quarter in October. U.K. startups secured only around $2.9 billion, according to a report by Dealroom and HSBC Innovation Banking.
Cherry Ventures itself did not feature in last year’s HEC-Dow Jones Venture Capital Performance Ranking. Bek Ventures (formerly Earlybird Digital East Fund) took the top position. Balderton Capital, a backer of Revolut, recently secured $1.3 billion for European tech startups, acknowledging Europe’s relative absence in the AI boom.
Cherry’s prior fund, announced in early 2022, totaled €300 million ($312 million). The venture capital firm’s investment portfolio features diverse companies, including space tech startup The Exploration Company, grocery delivery startup Flink, neurosurgical microbots company Robeaute, Flix SE (owner of Greyhound), and logistics unicorn Forto. Limited partners (LPs) in the new fund include notable entrepreneurs such as Miki Kusi from Wolt, Ilkka Paananen, CEO of Supercell, and Jochen Engert from Flix. Cherry Ventures has achieved 18 exits, including CoW Swap, Ninetailed, and Homelike.
