In the crisis-ridden startup scene, two prominent investors have taken an unusual step: Berlin-based La Famiglia is partnering with the significantly larger US investor General Catalyst, "to build Europe's leading early-stage transformation platform," as announced by the companies. The two venture capital firms have a history of collaborating on previous investments, including their recent funding for the Munich-based military technology startup Helsing.

This partnership provides La Famiglia with the financial resources, among other things, "to invest in the most promising European founders." Launched in 2016 by Princess Jeannette zu Fürstenberg, La Famiglia currently has 64 startups in its portfolio, including Munich's HR software firm Personio and Berlin's digital freight forwarder, Forto. In March, the investor launched two new funds with a total volume of 250 million euros. General Catalyst, established in 2000 and active in Europe for about a decade, reportedly has 467 portfolio companies according to Pitchbook, having raised nearly 9 billion dollars so far. The merger presents an opportunity for the US firm to "combine forces with a true European seed platform."

After the boom year of 2021, the winds have noticeably shifted for the startup and venture capital scene. Inflation, rising interest rates, and a general economic slowdown are putting pressure on the valuations of young companies and making fundraising more difficult for investors. In Europe, based on calculations by Pitchbook, investors raised nearly $9 billion in the first half of the year, which is only about one-third of the total from the year before. In the US, it was nearly $43 billion by the end of September, which is not even a quarter of the previous year's total.

This challenging environment is also leading to novel developments in the industry. According to a report from the tech news portal "The Information," the New York-based VC firm Greycroft recently had to let go of five employed investors after missing certain fundraising targets. Greycroft had invested in platforms like the dating app Bumble, which went public in 2021. Alongside the layoffs, the US investor is now withdrawing from the healthcare and fintech sectors.

The mood in the industry is correspondingly gloomy. Among European VC firms, trust in long-term growth prospects has recently diminished, as indicated by a survey from the European Investment Fund.

In the industry, moves like the one made by La Famiglia and General Catalyst are now expected from other VC investors as well. Andris Berzins, Managing Partner at Estonian Change Ventures, notes: "The number of funds has grown significantly in recent years, especially in 'hot' areas like Climate Tech." He believes that not all of them will succeed in raising more funds. Consequently, "they will consider options, and one of them is to merge."

On the other hand, the startup scene sees the merger of La Famiglia and General Catalyst as recognition of the local ecosystem. It demonstrates "how positively US funds presently view Europe and its investment opportunities," says Jan Miczaika, a partner at Munich-based venture capital firm HV Capital, to Börsen-Zeitung. "Several US funds have recently strengthened their presence in Europe. While the merger of two VC funds is certainly not the norm, the bold move of these strong partners could pay off in the long run."

In the future, La Famiglia, whose brand will be preserved for now, will be responsible for General Catalyst's seed investments. Fürstenberg will take on the role of Managing Director, and the two La Famiglia offices in Berlin and Munich will also continue to operate.