Karey Barker, Founder and Managing Director of Cross Creek, shares a candid perspective on how U.S.-based LPs evaluate European VC funds—and what they’re really looking for.
With nearly 20 years of experience and roots in public market investing, Cross Creek has evolved into a disciplined fund of funds platform, backing both established and emerging venture managers. While the majority of its portfolio remains U.S.-focused, Barker says interest in Europe is rising—but not without conditions.
✅ What LPs Like:
Sector expertise: “If you’re a smaller fund, you need to be focused,” Barker said. LPs favor managers with deep domain knowledge—whether in fintech, cybersecurity, or biotech.
Local presence: Cross Creek looks for GPs with teams embedded in the markets they invest in. Access to high-quality deal flow often depends on local knowledge and networks.
Fund size discipline: The firm prefers funds in the $200–$500M range—big enough for scale, small enough to stay agile. “Our favorite funds could raise billions, but choose not to.”
Long-term performance: Track record remains essential. Spinouts from established firms are more attractive than unproven first-time teams.
⚠️ What LPs Are Wary Of:
Fragmented regulation: Cross Creek is cautious about how local regulations and government capital mandates can limit a GP’s geographic flexibility and operating efficiency.
Overstretched geography: European VCs often call themselves “pan-European,” but LPs like Cross Creek scrutinize whether firms truly have the team and infrastructure to execute across regions.
Limited liquidity: With IPOs still scarce, LPs want to see managers building real value—not just chasing inflated valuations.
Ultimately, Barker stressed that European VC is 90% the same as the U.S.—but the last 10% matters. That includes understanding regulation, capital restrictions, and market access. For GPs hoping to attract international LPs, clarity, focus, and transparency are non-negotiable.
