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London (and Europe’s) Biggest Tech Startup Funds And What They Are Buying

It’s raining funding in Europe – but where are the puddles forming?

Sometimes startup founders must feel a little bit like Samuel Taylor Coleridge’s Ancient Mariner and his stranded crew mates, who stared at the ocean surrounding their lost ship and cried out in desperation: “water, water, everywhere and not a drop to drink!”

“Funding, funding everywhere, but not a penny for me”, is a common refrain across entrepreneur and founder meet-ups across London and yet there are new fund launches being announced almost daily.

So in the interests of helping founders approach the right VC’s (the ones the pension companies, institutional investors and hedge funds are favouring, not the ones proffering the dreaded “sweat equity”), here’s Haggerston Times’ guide to some of the biggest fund launches of the past few months, who the key players are, and what they are investing in.

We hope this guide will act as the launchpad for you to find the funding your company needs, and that you won’t conclude, as Edmund Blackadder once did of his Great Aunt’s fortune, that the funding on offer in London is “as capacious as an Elephant’s scrotum, and just as difficult to get your hands on”!

Earlier this month, E.ventures announced the closure of a $150m fund to invest in tech startups across Europe. The German based VC firm, previously known as BV Capital, is reported to have more than $1 billion under management and has backed startup success stories such as Groupon, Azimo and Sonos.

Co-founder and General Partner at E.ventures, Christian Leybold, says: ““Our willingness to explore every corner of the continent and provide operational support to the businesses we invest in increases the potential of our funds.” Which presumably means the firm, which has offices in Berlin, Hamburg, San Francisco and Beijing, will be looking at London closely.

Frog Capital’s €90m European Growth fund II received a further injection of €9m from the British Business Bank’s Venture Capital Catalyst Fund, also this month.

The fund has also backed Azimo, as well as London based Skimlinks, Ratedpeople.com, also based in the UK, and Order Dynamics. Its Managing Partner Mike Read believes “The European growth capital opportunity for tech is exceptional right now”, but that until recently, “the supply of capital focused on this area has not kept up.”

The British Business Bank itself has now committed more than £71m across 8 different VC funds; says Keith Morgan, Chairman of BBB Investments Ltd., of Frog’s Euro fund; “the fund will provide much needed equity capital to more businesses across the UK”.

Another Berlin based VC, Cherry Ventures closed a €150m fund at the beginning of May, Cherry Ventures II. The firm have invested in more than 20 portfolio companies over the last 3 years alone, which they say have generated €2bn worth of market capitalization.

Backed by the European Investment Fund and private family equity firms, amongst others, Cherry Ventures say that they plan to continue to invest between €700k-1.5m in seed stage rounds as well as adding value by providing strategic mentoring, coaching and recruiting for key positions.

The current portfolio includes companies such as Kitchen Stories, Lenda, and Lesara. The fund will be managed by Filip Dames, Daniel Glasner and Christian Meerman.

(BTW, notice anything about these funds – that’s right, they are all European Funds – does this give the Brexiteers something to think about, perhaps?)

Illustration of very cute unicorn poop

There was a time when VC funding for start-ups was as rare as unicorn poop – not any more!

And here’s another; Pamplona Capital Management have raised a whopping $1bn fund to invest in TMT (Technology, Media & Telecommunications) companies across Europe and the US.

The new fund has already made its first investment, into Dyn, a fast growing, cloud based internet performance management company based in Manchester.

Dyn fits the fund’s requirement for “high growth companies in segements including cloud computing and SaaS companies, mobile platforms and services and industrial technologies.” The fund will consider both controlling and minority stakes.

Pamplona are headquartered in London and New York, although the Fund’s manager, Justin Perrault and his team will be based in Boston.

Back in April, Backed VC, founded by 28-year-old ex-Andressen Horowitz, Index Ventures and McKinsey employee Andre de Haes, announced the launch of its new €30m pan-European seed-stage fund whose mission, he says, “is to be the most collaborative, community-driven fund in Europe.”

The fund, managed by De Haes and fellow Oxford graduate Alex Brunicki, also 28, has already backed 10 startups, including UK based video streaming service Boiler Room, AI music composer Jukedeck, Lystable, and electronic kits for kids manufacturer Tech Will Save Us.

De Haes has said he intends to back sectors whose products are further advanced than their Silicon Valley rivals, such as fashion, music, gaming and Fintech. “We see ourselves as talent scouts”, he has commented.

After closing nearly $2bn of fundign for 2 new funds in the US, Accel Partners quickly followed up by announcing a $500m fund, Accel London V, to focus on Series A and B investments in Europe and Israel.

Accel have good form when it comes to backing European startups, with previous investments including Deliveroo, French ride sharing company Blablacar, and London based lending platform Funding Circle; the latter two are now classed as “Unicorns”.

Accel V, the firm say, will “back the next generation of entrepreneurs.”

Referring to Europe and Israel, Harry Nellis, partner at Accel London says: “we’ve never seen so many great founders, both gritty and ambitious, come out of the region, and are excited to help them build the next generation of truly great, enduring businesses.” Accel now has €2.5 billion of funds under management in the regions.

Octopus Ventures revealed in early April that it had added an additional $143m to its early stage growth fund, bringing the total amount raised to more than $570m.

Y-Plan, Secret Escapes and SwiftKey (what an exit they had there, to Microsoft for $250m) backer Octopus say they plan to invest more than $100m into European early stage startups in 2016. The company typically backs 10-12 companies every year.

“About 25% of the money we will invest will go into new investments and 75% will go into follow-on investments”, says the firm’s head Alex Macpherson.

Index Ventures have also joined the party, announcing a $550m fund for seed and venture investments in Europe, Israel and the US, less than a year after closing $700m for later stage startups.

Dropbox, Etsy, Facebook, Flipbook and LoveFilm have all been Index Venture backed and gone on to…well you know the rest!

Former Twitter CEO Dick Costolo has recently joined one of the Venture Capital community’s most famous names, as partner. “Over the past 20 years, we’ve been fortunate to have partnered with some of the most visionary entrepreneurs,” says fellow partner Danny Rimer, who launched Index’s London office all the way back in 2002.

8 of Index’s portfolio companies have gone public in the last 2 years, including PureStorage, Hortonworks and King, who made the game Candy Crush and were acquired for $6bn.

And finally, it’s not just the US and Europe who get excited about London’s startups; Chinese investment firm Cocoon Networks, a spin off from Baidu investors China Equity Group, have $715m to invest in companies ““whose products and services show promise and potential for growth in the Chinese market,”

To show they mean business, the company has launched an incubator space in London and will look to invest in anything from FinTech, BioTech, Fash-Tech, medical and more. It certainly sounds like Cocoon get London’s vibe, and with the help of Cocoon, many London founders will be excited about breaking the notoriously tough Chinese market, something that Facebook, Uber and Google have all failed to do yet.

So plenty of grounds for optimistic founders – now all you have to do is find out which parties all of these firms employees go to, and talk your way on to the guestlist. Good luck!

Are you a fund or a fund manager who has raised or is raising capital? We’d love to hear from you – send us your info via our contact page and we promise to do our best to spread the word.

 

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