Who Really Benefits When Venture Moves In?

Painting: Raphael’s “The School of Athens” (1511)

Over the past months, investors in European venture capital have started offering desks before they offer cheques.

In London, Balderton’s headquarters host pre-seed founders for six months at a time through a programme called Balderton Launched. In Copenhagen, byFounders runs The Shack, a non-equity residency for teams that may not yet have raised a round. These initiatives are not accelerators in the traditional sense. There is no theatrical demo day, no automatic investment at the end and, in most cases, no formal promise of capital at all.

For most of its history, venture capital functioned as an episodic encounter. Founders built in relative isolation, surfaced when they were ready, and investors attempted to compress years of behaviour into a handful of meetings. It was imperfect, but it suited a world in which early-stage capital was scarce and building a credible company required time, infrastructure and money.

That world no longer exists.

Between 2015 and the 2021 peak, annual European venture investment increased more than fivefold, surpassing $100bn. Even after the correction, the ecosystem contains far more seed funds than it did a decade ago. At the same time, the cost of building has fallen dramatically. Cloud infrastructure, open-source software and, more recently, AI tools have shortened the distance between idea and prototype. A small team can produce something technically impressive in weeks.

What has not changed is the distribution of outcomes. Venture returns remain governed by power laws. In most funds, one or two companies generate the majority of performance. The number of cheques has increased, the number of true outliers has not!

This is the context in which desks suddenly matter.

If everyone can see the same polished demo, valuation becomes the battlefield. If, however, you meet a founder months before there is a demo, the competition shifts. You are no longer underwriting slides, you are observing judgement, stamina and taste. Who keeps refining their thinking when no one is watching? Who attracts strong collaborators without brand leverage? Who demonstrates a genuine understanding of a market rather than a passing familiarity with its jargon?

A residency stretches the window of observation. It replaces episodic evaluation with continuous exposure. For a fund, that is not hospitality, it is information!

It is also a defence. Large multi-stage platforms, US and European, have moved earlier into seed. In smaller, capital-dense ecosystems such as Scandinavia, a limited number of high-quality companies can attract multiple term sheets within days. Waiting for a formal process to begin increasingly means competing on price and on the utterly famous “value add”. Building relationships before a company formally exists is a way of competing on access instead.

Silicon Valley benefited for decades from accidental density. Universities, repeat founders and Sand Hill Road firms coexisted within a few square miles. Proximity was embedded in geography. Even there, programmes such as Sequoia’s Arc formalised early engagement. Europe, fragmented across cities and languages, developed venture more as a network than as a neighbourhood. Founder residencies are, in part, an attempt to manufacture that density deliberately rather than inherit it accidentally.

From the founder’s perspective, the appeal is not merely financial. Early-stage building is often isolating. Most founders spend their days in small teams, absorbed by product and uncertainty. Being surrounded by others attempting something equally ambitious changes the psychological landscape. Doesn’t ambition compound when it is shared? Y Combinator demonstrated long ago that cohort intensity alone can materially accelerate progress, the environment itself becomes a forcing function.

Yet proximity is not neutral.

Allowing a fund sustained visibility into your market framing, technical direction and internal debates before it has committed capital introduces asymmetry. If the fund ultimately decides not to invest, it retains insight. Deep early integration can also shape perception in later fundraising rounds. Optionality, one of a founder’s few structural advantages, must be managed carefully. There have already been cases of funds hosting teams for months, assuming the round was theirs to close, only to watch the company raise elsewhere.

It is telling that more neutral spaces, such as Stockholm’s Founders House, supported but not controlled by venture firms, have gained traction. Founders appear to want density and peer pressure without immediate alignment to a single balance sheet. Access and independence are being weighed consciously!

What, then, does this move toward shared desks signal?

That the bottleneck in venture has shifted. Capital is no longer the scarce resource at the earliest stage. Differentiated access to exceptional people is. As more money chases roughly the same distribution of outcomes, funds are pushed closer to the moment of formation itself. The office becomes less a place of administration and more a site of selection, and a live demonstration of “value add” before the right to invest has been earned.

Whether this produces better returns remains to be seen. Another turn in venture capital’s permanent search for “ALPHA”