On October 13th Salesforce Ventures, the investment arm of the cloud service giant, announced that it has earmarked $100 million to invest specifically in European startups.
Salesforce Ventures has pumped half a billion dollars into over 150 cloud and enterprise startups since 2009. Though most of those investments focuse on the US, Salesforce Ventures is now getting more serious in the Old World. In their portfolio, which contains 150+ companies, only 17 come from Europe. Considering this, their recent announcement is a big step ahead for the business.
“It’s now the right time for us in Europe. Europe is adopting the cloud very rapidly, and the opportunities are immense for us with an enormous pipeline for us to invest in”, says John Somorjai, Salesforce’s EVP of Corporate Development and Salesforce Ventures.
Their analysts believe that European Business investment in cloud-based software and services will grow twelve times faster than other IT segments, with €33.3 billion put into cloud services by 2019.
These are relatively modest beginnings. Salesforce’s venture growth follows in the footsteps of other big tech giants like Google, who are also ramping up their venture activity in Europe. Google Ventures splashed on to the scene in 2014 with a group of five general partners dedicated to investments in Europe.
European startup scene is less over-saturated
A motivation for venture firms coming to Europe, be they corporate or independent, is that the startup scene in this part of the world is relatively smaller and less over-saturated than that of Silicon Valley. This means potentially less competition from other venture firms for getting involved in the most promising companies, and lower valuations and funding rounds than those that are typical on the West Coast.
But things could ramp up quickly, too. Similar to other corporate venture funds, Salesforce Venture does not raise money from limited partners. Instead, it gets capital directly off Salesforce’s balance sheet – a way of both growing the wider ecosystem of cloud services for enterprises and potentially making connections with companies for wider corporate dealflow.
This also means that while the plan is to invest the $100 million over the “next few years,” if something interesting came along, Salesforce Ventures has the ability to change up that amount.