Highland Europe — the tech development fund greatest recognized for backing excessive profile late-stage startups like GetYourGuide, Huel, WeTransfer, Wolt and Zwift — has closed its fourth fund, elevating €700M in a relatively quick area of time in comparison with earlier fund closes. Highland plans to ‘double-down’ on its technique of being one of many few tech-focused development funds honing in solely on tech startups, a sector of the financing world which in Europe, nonetheless to today, is underserved.
The fund has additionally strengthened its crew with the promotion of Jean Tardy-Joubert, Gajan Rajanathan and Ronan Shally to Associate. Tardy-Joubert and Rajanathan joined Highland in 2017/18 from Qatalyst, the San Francisco-based boutique funding financial institution serving the worldwide tech sector, whereas Shally has been with the agency since 2014 and is Highland’s Chief Monetary Officer.
The brand new fund means Highland Europe’s belongings beneath administration have risen to €1.8bn.
Over the previous 12 months, the agency has backed seven founding groups, investing almost €200M in Alkemics, Cobalt, DominoDatalab, Farewill, Meditopia (the ‘Calm for the Center East’), Modulr and Supermetrics in addition to the present portfolio.
Highland Europe’s portfolio firms attracted exterior funding, with €730M follow-on funding within the final 12 months, a few of which fueled seven M&A transactions accomplished by portfolio firms.
The agency mentioned it had additionally helped the founding groups behind Spot and Neatly.io to navigate strategic and personal fairness curiosity, leading to “substantial liquidity occasions,” it mentioned.
Fergal Mullen, co-founder and companion at Highland Europe, mentioned in a press release: “Throughout 2020 we’ve seen 10-year tendencies in tech adoption compressed into one yr throughout each shopper and enterprise segments. Software program has gone mainstream and it’s mission-critical. The chance on the development stage in Europe has by no means been extra evident or extra pressing.”
The shortage of development funds in Europe is stark if you take a look at the info. Figures from Dealroom.co present that European firms raised 38% of worldwide enterprise capital at Seed, however this determine dropped to 21% at Collection B and 14% at Collection C (rounds of €40-100M). In keeping with one estimate, only one in eight European firms reaches scale, in contrast with one in 4 in America, suggesting that European corporations are starved of funding on the development stage.
Talking solely to TechCrunch, Mullen mentioned: “We raised this fund in file time. We began elevating on July, 26 and we completed on September 24. So it was very, very fast. We’ve got a rare group of traders. They didn’t simply come again, they got here again with considerably extra capital.
“We’re delivering good returns, and we’re sticking to our technique. We make commitments on what we’re going to do, we don’t deviate, we’re very centered, and our traders like that. We don’t go all the way down to early stage, we don’t leap up into PE offers and we don’t leap off into issues outdoors pure tech. They know what they’re backing and that’s what they get and the returns are there. The fund is in revenue, that means, they’ve already acquired again nicely over greater than the capital that they contributed. And there’s nonetheless 12 lively firms in that portfolio, so there’s plenty of worth nonetheless to return.”
Mullen identified that GetYourGuide, a portfolio firm hit laborious by the destruction of the journey market in the course of the pandemic had stepped as much as the problem: “They most likely received hit the toughest gentle of anyone. So think about final yr, you’re cruising in the direction of nicely over a billion euro, a billion of bookings for the yr. And you progress from that, in a two week interval to zero. Proper? And once I say zero like I imply zero, all-time low. And worse than that, bookings that have already got been made for the longer term, months, disappeared. However they survived as a result of, for one, they’d plenty of money readily available from the large fundraise final yr. Quantity two, they made sacrifices early that had been initiated by the founding crew.”
“And once I say sacrifices: think about a bunch of founders taking 50% pay cuts throughout the board. They requested individuals in the event that they had been keen to take part in a ‘wage minimize for fairness’ programme. They anticipated 50 individuals to perhaps put their arms up. They’d 157 individuals take a 30% pay minimize. And in return, they recover from compensated in new fairness. All this added as much as the purpose the place as an alternative of getting lots of of hundreds of thousands of income within the yr, they’d, , 40 or one thing like that. However will nonetheless find yourself the yr with the identical money year-end. After which on high, we put one other 15 million on high. So that they’re now in a greater place. As soon as issues choose up I believe within the spring, summer season interval, they’re able to speed up and actually get on with it. It’s a unbelievable story and it deserves a point out,” mentioned Mullen.
Highland’s 2020 funding highlights:
* ContentSquare – $190m Collection D with participation from Highland Europe
* Featurespace – £30m with participation from Highland Europe
* Zwift – $300m with participation from Highland Europe
* Modulrfinance – £18.9m Collection B led by Highland Europe
* Wolt – €100m observe on Collection D co-led by Highland Europe
* Domino Knowledge Labs – $43m Collection E co-led by Highland Europe
* Alkemics – €21m Collection C led by Highland Europe
* Meditopia- $15m Collection A led by Highland Europe
* Farewill- £20m Collection B led by Highland Europe
* CobaltAI- $29m Collection B led by Highland Europe
* Supermetrics – €40m Collection B led by Highland Europe
* Contentsquare, Wolt, & Zwift raised €100m+