Q&A with a Sequoia Capital partner on investing in European markets

  • Sequoia Capital opened an office in London last year as it seeks to target more European companies.
  • He has a particular interest in Germany, said Matt Miller, partner at Sequoia.
  • He explained how COVID-19 has been a catalyst for the “huge” momentum of European startups.

This is an edited and translated version of an article originally published on April 27, 2022.

Sequoia Capital is increasingly interested in the European startup scene. The American venture capital firm moved into Europe last year by opening an office in London.

Part of the new London team is Matt Miller, a partner of the firm for 10 years who was previously in Silicon Valley.

In an interview with Insider, Miller talked about the European startup scene and what Sequoia is particularly looking for in the German market – where it has previously invested in companies like online broker Trade Republic and software companies as as N8n and Xentral service. .

Sequoia is one of the first American venture capital firms to not only invest in Europe, but also to open an office there. Why?

Until last year, we used to come from the United States to do one or two European investment agreements a year. But at some point, that wasn’t enough.

Today, more and more global market leaders come from Europe, such as Celonis from Munich, where we are not invested. Or in the field of automation, we looked at a company from San Jose and one from Bucharest, Romania. In the end, the Romanian was the best.

We wanted to work as closely with companies like these as we did with those in Silicon Valley.

What did you discover after a year in Europe?

The momentum behind European startups is huge right now, even bigger than we could have imagined. In my opinion, a big catalyst has been the COVID-19 pandemic.

Until now, many founders thought they had to move to the United States to create a startup. The pandemic has completely halted this wave of migration.

It made many realize that they can just build their business where they are. While they hold their positions remotely, they also still have access to talent anywhere in the world. It’s fantastic.

What is your position in Germany?

Germany is a very important market for us. At least every two weeks, one of us is on site, so we are very active there. When we opened our London office last year, we made reconnaissance trips to Germany — 40 to 50 meetings a week, 7 a.m. to 10 p.m.

It was brutal. But we wanted to understand the market and meet as many people as possible.

What kind of startups is Sequoia looking for in Germany?

We are particularly interested in enterprise software. There is currently a whole wave of exciting software vendors developing solutions for small and medium-sized businesses.

How do you think the German startup scene has changed in recent years?

In the past, the ecosystem was dominated by Rocket Internet, which was also very successful and educated a lot of people. In recent years, the scene has noticeably blossomed and grown. It’s exciting to see that many of these companies are not only coming from Berlin, which has always been the obvious center, but also from other corners of the country, such as Bavaria or Cologne.

It could also have something to do with the pandemic – people are moving less often now than a few years ago to start their business.

Is there something that doesn’t work as well in Germany as in other countries?

The most difficult thing is that the notice periods are so long. Some key positions are super important for the development of a business. Once you have successfully found a suitable candidate, you may have to wait another six months before they can start. It’s really difficult. During this time, the company could have developed in a completely different way.

This is a big problem for startups in Germany compared to other countries where shorter notice periods apply. But other than that, I think the diversity of talent and experience is huge there.

Many startups in Germany complain about not finding the right people.

It is a universal problem. We have an imbalance right now because so much venture capital is flooding the market.

This makes recruitment difficult, as there are a limited number of people who can do these jobs. That’s why I think we need to focus more on training and open the market to more people.

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