Cherry Ventures Launches $500M Fund for Early-Stage Investments: Is It Sufficient for Future Growth?
European venture capital (VC) is often perceived as lacking the financial muscle to compete with its U.S. counterparts, which regularly secure billion-dollar funds. However, Cherry Ventures, a Berlin-based VC firm, is challenging this narrative by recently closing its latest fund at $500 million. This fund aims to support both early-stage investments and follow-on rounds in Series B and later stages.
Cherry Ventures’ Ambition for European Startups
In its official statement, Cherry Ventures expressed a bold ambition: to foster the creation of the “first trillion-dollar company in Europe.” The firm is calling for a shift in perspective regarding Europe’s economic potential, urging stakeholders to move away from a “doom and gloom” outlook.
The Current Landscape of European Startups
Despite these ambitious goals, evidence supporting the trajectory of European startups toward a trillion-dollar valuation is scarce. For instance:
- While the AI sector is expected to be a significant growth area, only a handful of the most well-funded AI companies are based in Europe.
- Recent research indicates that European AI startups raised approximately $8 billion, compared to around $97 billion in the U.S.
This disparity highlights the crucial role of capital in fostering innovation, a fact well understood by Cherry and other venture capitalists.
Recent Trends in UK Venture Capital Funding
In the United Kingdom, which represents the largest startup market in Europe, venture capital funding saw a dramatic decline. In October, funding for U.K. startups decreased by 50% from the previous quarter, totaling around $2.9 billion, as reported by Dealroom and HSBC Innovation Banking.
Cherry Ventures’ Portfolio and Previous Fund Performance
Cherry Ventures did not rank in last year’s HEC-Dow Jones Venture Capital Performance Ranking, where the Earlybird Digital East Fund took the top spot. In contrast, Balderton Capital, the backer of Revolut, successfully raised $1.3 billion for European tech startups, echoing the sentiment that Europe is lagging in the AI race.
Cherry’s previous fund, launched in early 2022, amounted to €300 million (approximately $312 million). The firm’s diverse portfolio includes:
- The Exploration Company (space tech)
- Flink (grocery delivery)
- Robeaute (neurosurgical microbots)
- Flix SE (Greyhound owner)
- Forto (logistics unicorn)
Limited Partners (LPs) in the new fund include notable entrepreneurs such as Miki Kusi of Wolt, Ilkka Paananen, CEO of Supercell, and Jochen Engert from Flix. Cherry Ventures has celebrated 18 exits, with notable names like CoW Swap, Ninetailed, and Homelike.
As the European startup ecosystem continues to evolve, it will be interesting to observe whether firms like Cherry Ventures can indeed pave the way toward the continent’s first trillion-dollar company.
