Nauta Capital, the pan-European VC that invests in “capital-efficient” B2B software program firms and client tech, has introduced the closing of a brand new €55 million “sidecar” fund devoted to backing its current later-stage portfolio firms.
The VC agency, with workplaces in London, Barcelona and Munich, usually invests in early-stage know-how startups from late seed and at Sequence A. The brand new devoted later-stage fund will likely be used to inject follow-on capital, primarily from Sequence C onwards.
The thought is to double-down on its most promising portfolio firms as they proceed to scale up and lift later-stage funding, thus making certain Nauta Capital doesn’t develop into too diluted. It additionally needs to be a draw for future co-investors who might be given assurances that Nauta has the capital required to affix in on bigger follow-on rounds.
“With this new follow-on fund, we will additional assist our portfolio, alongside different co-investors, all through an organization’s total lifetime till exit,” says Carles Ferrer Roqueta, Normal Accomplice at Nauta Capital.
The VC has backed greater than 40 firms. Present portfolio embody Brandwatch, Marfeel, BeMyEye, ForceManager, MishiPay, Talentry, Nextail and zenloop.
In the meantime, Nauta Capital’s sidecar fund is claimed to be backed by the agency’s present traders hailing from continental Europe, the U.Ok. and the Americas. They embody British Affected person Capital, the European Funding Fund, the ICF and the ICO.
Under follows an electronic mail Q&A with Nauta Capital Normal Accomplice Carles Ferrer Roqueta, the place we focus on the necessity for a sidecar fund, why now, and the way Nauta Capital views Brexit.
TC: Your calling this a ‘sidecar’ fund for observe on investments, however many early-stage VCs earmark a portion of their major fund for observe on, so how is that this any totally different?
CFR: Our funds certainly have devoted follow-on reserves for current portfolio firms. We are literally very conservative when calculating the quantity of reserves now we have for every of our investments to ensure we will assist every of our firms all through their development. Having mentioned this, some firms develop very quick and lift extra money than anticipated initially, after which it might develop into tough for our current funds to take care of or use their full pro-rata. Alternatively, some firms might take longer to totally develop and extra rounds can occur sooner or later, and these timings might not essentially match with our funds that had initially backed them. In these conditions, a sidecar fund is good to maintain on supporting our firms with our household of funds that additionally offers a optimistic signal to new follow-on traders becoming a member of the corporate.
TC: Is that this new observe on fund an indication of how excessive European valuations are proper now, within the sense that it’s designed to make sure you don’t get too diluted in future rounds?
CFR: Our mannequin tends to keep away from over-heated valuations and we’re very disciplined on the constructions of our offers, which resemble one another. By persistently avoiding overpaying on offers, strain for the following spherical is of course launched. When our firms progress nicely they then naturally see valuations develop quickly, and a few of these firms can use extra funds to foster development additional. Our dilution is sort of naturally protected in these conditions, however nonetheless, when growing capital is required for development acceleration on mature firms, our early stage funds might not all the time see a potential full professional rata participation. So our sidecar fund takes care of those conditions.
TC: A fund of €55 million doesn’t really feel like some huge cash for put up Sequence C throughout doubtlessly 40 plus firms. How do you see the maths enjoying out?
CFR: That is our first sidecar fund and we’ll be taught quite a bit from it. Future sideCar funds we might elevate could also be bigger as soon as we totally take a look at the mannequin. We focused 50M however the urge for food throughout current traders was superb, so we expanded it a bit additional. We principally went again some years in time and checked how a lot cash our funds had not been capable of deploy on late stage observe on rounds. With actual information we then made positive we’ll now have this automobile that represents an upside alternative for our traders in firms which might be already in our portfolio, so naturally decreases danger additionally for them. Our portfolio has grown and can proceed to develop with new early stage funds we’ll elevate, so extra alternatives for larger sidecar funds might seem sooner or later.
TC: Did Brexit come into your considering right here or complicate issues with reference to elevating this new fund?
CFR: No, it was not a problem for us. We’re a pan-European participant with a really robust presence in London, Barcelona and Munich. We’re totally dedicated to the U.Ok. with a powerful crew of eight folks and investing out of this hub within the U.Ok., Eire and firms that use the U.Ok. as a touchdown platform. As an illustration, now we have led an funding in a Helsinki-based firm that has already created a 10 folks crew in London. As well as, now we have 2 additional workplaces in Barcelona and Munich, and that offers us a reasonably good native entry to deal-flow and expertise round our totally different funding hubs. Our LP traders embody fund of funds, monetary establishments, one endowment, insurance coverage, household workplaces and authorities companies, all throughout the U.Ok., Continental Europe, Asia and the Americas.
TC: Extra broadly, what can be your favoured final result for the U.Ok. and Brexit?
CFR: Exhausting to inform with the latest occasions at Parliament! I genuinely imagine that crucial factor is, unbiased of the result, to convey again certainty to elementary points like entry to expertise, funding and possible frictionless commerce and communication. Conditions of deadlock are all the time tough in lengthy cycle industries like VC. Our portfolio firms, though very agile by nature, want certainty for the long run. I’m positive this will likely be achieved.