Investors placing capital in earlier and earlier tech deals has been a historical trend for the last few years, but this strategy was generally reserved for the traditional, "high-growth" VC arena. VCs needed to snag earlier ad earlier deals, otherwise they would be diluted at a later stage. But with startups coming up with models that can book revenues faster, they have increasingly less need for the VC deal, which typically leaves founders with less control and less equity than the newly ensconced VC on their board. That said, capital at this early stage for "growth-based" startups was often hard to come by. Thus, the "early growth fund" has been invented to address this issue.
Now, the latest arrival in this arena is Balderton, one of the Europe’s top VC funds, with may unicorns under its belt.
Balderton has now launched a $680 million "early growth" fund to invest in high-potential tech companies, targeting around 15 companies at the early-growth stage (sector agnostic).
It plans to invest between $25 million and $50 million per company through both primary and secondary investments. The fund will be lead by Bernard Liautaud, David Thévenon and Rana Yared.
Since its founding in 2000, Balderton has raised $4 billion to invest in European startups and backed more than 230 companies, primarily at the Series A stage. Its investments include Depop, GoCardless, Infarm, Revolut, THG, Vestiaire Collective and Zego. The firm’s "Liquidity I" portfolio also includes Darktrace, Flywire, Graphcore and Truecaller.
Bernard Liautaud, managing partner said: “I’ve been an investor at Balderton since 2008, and it has been incredible to see the increasing number of ambitious European founders, and to be able to support them financially through those critical first three to five years with our early-stage funds. With this Growth Fund, we can now support them as they scale to become global industry leaders. We predict a $50 billion growth opportunity in Europe in the next three years alone, and we want to be the first choice for those ambitious founders.”
Rana Yared, general partner, added: “Our approach for this fund will be ‘one of few’. This means personalised attention from the entire partnership, plus access to Balderton’s leading platform team. We’re looking for 15 or so really exceptional companies that have the potential to be sector leaders and disrupt global industries.”