Investment Firm Coatue Management Closes European Office in London as Startups Struggle
Investment firm Coatue Management is making the decision to close its European office in London, just two years after its opening, as startups in the region face increasing challenges in the technology market. The move is part of a broader strategy overhaul by Coatue Management, as the firm aims to adjust to a downturn in the tech industry.
In an internal memo seen by Bloomberg News, Coatue’s leaders described the closure as a way to streamline their investing approach, with a focus on prioritizing domain expertise over regional coverage. Despite the office closure, the fund’s commitment to European ventures remains intact, according to the memo.
Sarah Cannon, Coatue’s general partner in London, is set to leave her role at the firm. However, she will continue to support the fund as an adviser. Coatue’s spokesperson confirmed these changes, but declined to provide further comments, while Cannon also refrained from making any public statements.
Coatue Management, based in New York and led by Philippe Laffont, has recently adopted a more aggressive approach to investing in startups with the launch of a new growth fund in 2021. The firm, which has been involved in venture investing for over a decade, has backed approximately 100 companies during the venture capital frenzy.
However, Coatue has had to shift its tactics due to the decline in tech valuations after reaching unprecedented heights. In November, there were reports that Coatue’s $7.7 billion growth equity fund suffered a paper loss of around 30% following markdowns of several startups. In an unusual move for a venture capital firm, Coatue also raised a $1.4 billion companion fund that allows its investors to back startups at a discount in exchange for a fee break.
Coatue established its European offices in 2022 and brought on Sarah Cannon, a former investor at Index Ventures, as a partner in the region. The firm has backed several high-profile UK and European startups, such as Monzo Bank Ltd., Checkout Ltd., Stability AI, N26, and was an early supporter of Spotify Technology SA and UIPath Inc., two rare European tech companies to go public.
However, Coatue has made few significant investments in European startups in recent years due to a decline in deal opportunities. According to a recent report from venture firm Atomico, funding for later-stage startups from major crossover investors like Coatue has hit a four-year low in Europe. Furthermore, a report from PitchBook revealed that the value of startup exits in Europe in 2023 was the lowest it has been in a decade, totaling €11.8 billion ($12.9 billion).
Despite Coatue’s decision to close their European office in London, other venture funds, such as IVP and Andreessen Horowitz, are expanding their presence in Europe. These prominent California-based venture funds have recently opened offices in London with plans to invest more in the region.
Coatue’s strategy shift reflects the current challenges faced by startups in Europe. By streamlining its approach and focusing on domain expertise, the firm is adapting to the evolving technology market. The closure of its European office marks a significant change for Coatue Management, but the firm remains committed to supporting European ventures through new investment strategies.
