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.

I look at raising money as a necessity for most fast-growing tech businesses. The truth is that generally you need to move faster in the world of technology than you do in most other industries and it is normally not possible to do this organically.

Raising money can help a business to accelerate its progress and take advantage of being early into a market. And it shouldn’t just provide an injection of cash, although this is clearly the main benefit – a good investor should also provide additional value to the business in terms of support, guidance and connections.

My advice when raising money is to raise more money than you need and also to raise it from the right people. Raising money is time consuming and financial projections are generally too optimistic and it’s for these reasons I’d try to raise more money than you think you need, assuming it’s available.

At MessageLabs we raised $30M from US based investors but only about half this amount was built into our ambitious expansion plans and associated cash projections – we didn’t know how we were going to use the rest of it but we were certainly pleased we took it when we did. We raised the money for MessageLabs in 2000, after only 18 months, but there was such momentum in the business and the   overall market for any Internet-based business that we were able to achieve a great valuation and choose from a long line of VC’s. It then turned out that it took a lot longer and cost more than we had expected to scale the business globally. One of the reasons for this was that we made our share of misteps along the way – one of which was an over-reliance on channel partners to sell the service that didn’t work so well when it comes to selling a SaaS service and another was that we needed to completely rethink the architecture of our service in the face of the huge growth in email volumes we were processing. But, most importantly, it’s just a reality of life that things generally take longer and cost more than you imagine they will.