Dozens of founders and executives at global tech groups including Google’s Eric Schmidt, Ocado’s Tim Steiner and Zalando’s Robert Gentz have backed a fund to invest in start-ups in the UK, Europe and the US.
The London-based fund, which is being launched next year by entrepreneur Brent Hoberman’s Firstminute Capital, has raised $111m in an initial round from a group of well-known founders.
The deal highlights the growing momentum in Europe’s venture capital scene, despite a squeeze on early-stage tech funding during the pandemic as Silicon Valley groups including Sequoia Capital set up outposts in London and other capitals.
Other new investors in Firstminute include Michael Lynton, former Sony executive and chairman of Snap; Palantir co-founder Joe Lonsdale; and Carl Pei, co-founder of China-based phonemaker OnePlus.
Mr Lynton said he was attracted by the growing opportunities in European tech and Mr Hoberman’s personal network, which includes running the Founders Forum series of events.
“He’s a very smart guy and one who sits right in the middle of a lot of start-ups,” Mr Lynton said. “It feels like start-ups coming out of Europe — both the continent and the UK — are finally getting to the place where they are competitive on the world stage.”
RIT Capital Partners is the fund’s anchor investor, marking its first backing for a European venture capital firm, it having previously invested in US funds including Sequoia, Benchmark, Thrive and Iconiq.
Additional institutional investors include the Chinese technology giant Tencent, German conglomerate Henkel and London-based venture fund Atomico.
The fund is the second to be launched by Firstminute Capital, which has its headquarters in London. The group said it counted 70 founders of $1bn-plus “unicorn” businesses as investors across the two funds.
Mr Hoberman, co-founder of Lastminute.com, Made.com and Founders Factory, said that the entrepreneurs would bring expertise and a network of contacts to help start-ups grow alongside their investment.
He said it was “fantastic to enable so many global serial entrepreneurs to give their experience to the next generation: we have over 70 unicorn founders joining us on this journey so far, and more to come as we approach our final close”.
The first fund has invested in 56 companies. Half of the companies have headquarters in the UK, close to a third in the US and the rest in Europe. Mr Hoberman said the next fund would have a similar regional investment strategy.
Firstminute’s wide-ranging investments include Element, a decentralised and encrypted messaging app, VitroLabs, which is developing lab-grown leather, and Heist Studios, which aims to “totally reimagine tights”.
The new capital will come as a much-needed boost to early-stage start-ups. Despite later-stage venture capital investments continuing to boom during the pandemic, it has been harder for entrepreneurs to raise new financing for younger ventures.
According to a site tracking the impact of the coronavirus pandemic developed by Beauhurst, a data company, and Plexal, a London co-working space, the UK saw a 52 per cent drop in funding for start-ups raising money for the first time between March and November compared with the same period last year. The number of deals has fallen 25 per cent since the start of lockdown.
The European venture capital industry has seen huge growth over the past few years. However, European venture funding fell 17 per cent for the first nine months of 2020 compared with the same period last year, according to Crunchbase, which tracks tech investments.
Spencer Crawley, Firstminute co-founder, said the fund would “support entrepreneurs, at the earliest stage, in creating the platforms that will reshape our world in the aftermath of the pandemic”.
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