European venture firms are finding it difficult to raise fresh capital from limited partners toward new funds, as many fund managers are unable to show satisfactory returns on previous investments.
Five venture capital companies told Business Insider that they spent more than 18 months soliciting funds from limited partners. Some fund managers have resorted to offloading their holdings in portfolio startups to maintain liquidity.
- Fund managers blamed the low returns on a shortage of exit prospects, forcing them to liquidate their stakes to "demonstrate their viability and continued performance to LPs."
- Four fund managers informed Business Insider that they had offered their stakes to peers at a significant discount.
- 18 months is considered an awfully long time for fundraising, as most fundraising is often completed within six months and may stretch to 12 months at most.
