More activity in fund-raising for venture funds

The recent bulletin of Go4Venture Advisers reports about February.

From a funding standpoint, February was another strong month. If anything, the market is becoming even more skewed towards internet and mobile: 13 of 14 Large HTI transactions in February were internet-related plays, be it internet services (9) or SaaS software (4). Late-stage continues to dominate, with C or later stages representing 8 of the 14. It is also worth noting that the UK is leading the charge, with Central and Eastern Europe making a strong showing (for the first time we had two investments from Eastern Europe) and, rather ominously, France does not feature – for the second consecutive month.

Interestingly, there were also considerable activity in fund-raising for venture funds in early 2014. As well as the flurry of announcements, it is noticeable how the investment strategies reflect the changing landscape towards a more value-added group of financial investors and the growing importance of corporate investors.

Financial Investors – where Tier 1 funds re-upped on the back of successful pan-European internet investment strategies (e.g. Accel, Acton, Balderton, Index), other venture funds are evolving from generalist IT and internet funds to managers of more specialised investment vehicles. Examples include:

• Amadeus (UK) raised £33mn (€40mn) for the first closing of the Amadeus IV Early-Stage Fund, an Enterprise Capital Fund supported by the British Business Bank.
• Atlantic Bridge Capital (Ireland) launched their $100mn (€75mn) Summit Bridge Capital China-Ireland fund with support from Beijing-based China Investment Corporation (CIC).
• Earlybird (Germany) held a first closing at $110mn (€80mn) for its Digital East Fund which will invest in Turkey and Central and Eastern European markets.
• Innovation Capital (France) raised €40mn (target €100mn) to invest in healthcare and autonomy for the elderly.
• Seventure (France) had a first closing at €62mn for their Health for Life Capital fund (target: €120mn), investing in microbiome and nutrition focussed businesses based in North America and Asia.
• United Ventures (Italy) raised a €50mn early-stage debut fund. The firm is the result of the merger of two smaller previous firms, focused on Italian digital start-ups.
• WHEB (UK) succeeded in launching its WHEB Green Growth Fund II, a cleantech specialist investment vehicle.
  
  

Corporate Investors:

• In Europe, Siemens announced a $100mn fund to invest in disruptive manufacturing process technology.
• Elsewhere in the world, Cisco set aside $100mn for the Internet of Things (IoT), or Internet of Everything as CEO John Chambers described it at CES in Las Vegas in early January.
• And IBM did the same with $100mn for the Watson Fund to encourage the use of its Watson “cognitive computing” platform. The last time IBM did something similar was for the launch of its S/36 mini-computer in the mid-1980s, in order to encourage the development of applications by Independent Software Vendors (ISVs). It ended up a big headache when IBM had to sell its stakes in hundreds of illiquid private companies a few years later. This time, however, investments will be in much more scalable cloud-based businesses, which should result in a better outcome.

The one thing which is not changing is the European Investment Fund (EIF) continuing to play a major role in financing European venture, providing 25% of total funding – with another 15% invested directly by states-owned funds such as Bpifrance in France, High-Tech Gruenderfonds in Germany, Finnvera in Finland and Portugal Ventures in Portugal