This is a guest post by Jos White, a partner at Notion Capital for TechCrunch. This is in part a response to recent criticism of European VC by Datasift which raised money from US VCs.

All you ever hear about these days with European venture capital is either that it is miles behind the US or that it can contribute greatly to economic growth and should be subsidised by governments. While I mostly agree with both these statements I think they are missing the central point. By investing in early stage European technology companies you can make a lot of money if you get it right.

I don’t understand why people shy away from this. Perhaps people feel unable to make this case and quietly step around it. Or, in these austere times, maybe us Europeans feel uncomfortable being outspoken capitalists. Yet I feel strongly that the evolution of virtually any successful market anywhere in the world was fuelled by the opportunity to make money, and I don’t believe European VC is any different.

The European early stage investment market as a whole has under-performed over the last decade. I’d put this down to an over-supply of cash, spurred on by the success seen across the pond, combined with an immature start-up ecosystem, all leading to too much indiscriminate investing.

At the same time, I don’t believe that the European market is performing as badly as reports suggest. It’s too early to measure the performance of funds from around 2005 onwards and the data available for the industry in Europe is poor and unrepresentative due to less regulation and disclosure – estimates put the number of funds that are included in industry reports at less than 5% of the total market.

As a result of this real and perceived underperformance, combined with the worst recession for decades, there has been a Darwinian like culling of the European VC industry. According to the EVCA, the number of funds dropped from 1,600 in 1999 to 596 in 2009 and, out of those remaining funds, only 30% are considered active.