European venture capitalists are deeply concerned about tapering domestic growth and the debt woes engulfing Spain, Greece and Italy. But when it comes to securing exits for portfolio companies, it’s the troubled state of the U.S. technology IPO and M&A markets that are a greater cause of anxiety.

That was one takeaway from a conversation with Barry Maloney, partner at Balderton Capital. Initially launched as the European arm of Silicon Valley’s Benchmark Capital, London-based Balderton has operated as a independent firm since 2007, focusing on early stage deals across Europe.

So far this year, the sluggish economy doesn’t appear to have affected the pace of deal-making. The firm has been an active investor, participating in such deals as a $38 million round for Russian online retailer KupiVIP, a $21 million round for telecom transaction software provider Openet, and a $17 million round for holiday rental website HouseTrip.

Following are some of Maloney’s thoughts on the European dealmaking climate, why so many startups have to move, and the weighty impact of Facebook’s IPO fizzle.

Q: What’s happening on the valuation front?

A: The European market certainly didn’t reach the frothy valuations we saw in the U.S. in the run-up to Facebook. It just never got there. So in that sense, that part (valuation declines) has been fairly avoided.  At Series A, the valuations in Europe are significantly lower. Part of that is because there are few pan-European venture funds.

Q: How about the exit environment?

A: For companies seeking an exit, the state of the U.S. stock exchange and valuations for tech companies are more relevant than say, whether Italy stays in the Euro. We are in the business of investing in European entrepreneurs, but the fact is those companies get built globally.

From that perspective, the tech markets in the U.S. are certainly a lot more closed than they were prior to Facebook. There are still IPOs happening, but they are few and far between. If you compare companies filing and getting out prior to Facebook and after Facebook, you see a big distinction.

Q: What are the hotspots for entrepreneurial activity?

A: In Europe, finding the right entrepreneurs to back is more of a shoe leather activity. You can find them anywhere from Italy to Spain to Russia. And once you’ve found them, where you build the company is more flexible. For instance, we’ve had portfolio companies move to London, Berlin, and Dublin. Those are all good areas for entrepreneurs because you have a critical mass of technical skill. In the last couple of deals we did, for instance, we found the entrepreneurs in Vienna and Lausanne. But the companies will get built out in London and Berlin.

Q: Balderton started out as the European arm of Benchmark. What are relations currently like between the two firms?

A: We are both independent firms now, but we look at their deals, and they look at ours. One of our companies – NaturalMotion, a game developer  – had a Series C with Benchmark. The entrepreneurs were previously based in Oxford and then moved their headquarters out to San Francisco.

Q: Are such relocations common?

A: Yes. Overall, the technical skills you come across in Europe are as good or better than any you’d find in the U.S. It’s more the product marketing and management that Europe is challenged in.

Photo of Eurozone Road Sign from Shutterstock. Photo of Barry Maloney courtesy of Balderton Capital.