Matt Sanders
Managing Partner
Guernsey
Attending the Sifted Summit in London last week was a reminder that the UK and Europe have no shortage of creativity, intellect or ambition in the venture capital and start-up space. From the quality of AI innovation emerging from UK universities to the energy in early-stage founder networks, the building blocks are in place. Yet too often, start-ups struggle to scale on this side of the Atlantic and the question arises - how can we build the right foundations for venture growth closer to home?
This short piece reflects on some of the challenges discussed at the Summit and how jurisdictions such as Guernsey and Jersey can play an increasingly valuable role in the venture capital space.
Systemic risk or entrepreneurial risk-taking?
A recurring theme at the Summit was the regulatory, and therefore cost, burden for start-ups in Europe compared to the US. There was general consensus that Europe’s frameworks, though robust, often reflect a misconception between systemic risk and entrepreneurial risk-taking.
While this may be a product of the UK and EU markets’ inherent conservatism, regulatory friction can entrench a low-risk appetite among investors even further. As a result, in addition to high establishment and ongoing compliance costs, the struggle to raise and deploy UK/EU-sourced venture capital becomes ever more real.
By contrast, jurisdictions such as Guernsey and Jersey offer proportionate regulation tailored to the scale and nature of venture capital. Structures like Guernsey’s Private Investment Fund(PIF) and Jersey’s Private Fund (JPF) allow sophisticated investors to deploy capital efficiently while maintaining appropriate oversight. For emerging fund managers, this can make the difference between getting a first fund off the ground - and never launching at all.
That said, this is not an argument for overconfidence or over-leverage. A balanced approach, where innovation is enabled without losing prudence, is essential. Guernsey and Jersey’s pragmatic, risk-sensitive regulatory environments provide a model for achieving that equilibrium: jurisdictions where institutional-quality governance coexists with flexibility, speed to market and notably lower costs.
Resilience: The new sustainability?
Resilience, autonomy and sovereignty were other keywords reverberating throughout the Summit, an evolution from the sustainability narrative of recent years. These speak to retaining ownership of intellectual property, creating local ecosystems that can weather global volatility and building self-sufficiency in key sectors rather than isolationist policies.
Guernsey and Jersey are particularly well positioned to meet these needs, which resonate across the VC and start-up landscape. The Channel Islands’ political and legal stability, independence, regulatory agility and global connectivity (particularly their links to both UK and EU markets) make either island an increasingly attractive base for capital deployment into start-ups and scale-ups wherever they are situated.
Challenging the narrative
Another point worth noting, and not to be underestimated, is the narrative itself. Media headlines often frame the picture as one of UK and EU talent flight and capital drain, painting a picture more pessimistic than the reality.
In our experience, the Channel Islands are seeing a steady stream of both emerging and more established managers who want to stay connected to the European ecosystem while operating within efficient, internationally credible frameworks. Importantly, Guernsey and Jersey funds can be marketed with relative ease into Europe (through NPPR regimes) and many other global markets, including the US.
This allows founders and managers to access international investors without the cost or complexity of a full EU domicile.
What's your right to win?
Start-ups who can answer this question will have the edge. In a competitive market a well-defined strategy that aligns with market demands is crucial. We heard at the Summit that scalable businesses know the problem they are trying to solve.
Guernsey and Jersey have been focused on removing regulatory friction and being strategically positioned to give managers the best chance of success. These jurisdictions are uniquely positioned, providing neutral access to multiple markets, legal certainty for investors where an opportunity doesn’t turn out as planned, and high-quality experienced advisers.
Strength in partnership
The conversations at Sifted Summit made clear that Europe has the talent, ideas and ambition to lead globally in innovation but success depends on having the right structuresin place to support them. By combining European creative and intellectual strength with the flexibility, proportionate regulation and international reach of Guernsey and Jersey, we can create a stronger, more fit for growth VC ecosystem.
Sifted Summit is an annual event that brings together Europe's most innovative tech founders, venture capitalists, startup leaders and industry experts to discuss the latest trends and challenges in the startup and venture capital ecosystem. Organised by Sifted, a media platform backed by the Financial Times known for covering the European startup landscape, the Sifted Summit serves as a key gathering for founders, investors and startup operators driving innovation from the front.
Our Investment Funds & Corporate practice group across the Channel Islands provide award-winning legal and professional services for every stage in an investment fund’s life cycle. With a deep experience of working with some of the world’s most successful financial institutions and asset managers, our talented teams are fluent in financial services and skilled at navigating the global investment markets.
You can also read our guide entitled "Focus on Asset and Investment Managers in the Channel Islands" to learn more about how we can assist you in this space.
