Startups Venture

Northzone Raises $500M As European VC Activity Looks Strong

On the heels of Angular Capital’s new fund, another Europe-based investment pool has been announced. Northzone, most famous for an early bet on Spotify, has put together a $500 million vehicle that will add more fuel to the global startup boom, even as some doubt creeps back into Startupland itself.

Northzone’s new fund will focus on “early-stage innovative consumer and enterprise companies across Europe and the US East Coast” according to the firm. The investing group puts capital to work in the early stages of the startup market, after Seed and before growth-stage investors take the baton.

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The new fund is Northzone’s largest to date. The investing company’s first fund was a modest 7 million Euro raised in 1997. That capital collection was followed by two more funds in the 90’s (10 million Euro and $75 million). In 2003, according to Crunchbase data, Northzone raised 78 million Euro to invest. That was its last fund under the nine-figure mark. A $240 million fund five in 2006 was followed by a 130 million Euro fund six in 2010. Then in 2014 and 2016 Northzone raised 250 million Euro and 350 million Euro, respectively.

Northzone is not the only fund we’ve seen raise record capital recently; it’s become a theme for venture groups to raise ever-larger capital pools to invest from as startups stay private longer, and competition for attractive deals has grown.

The group’s latest fund is not the only European-focused fund recently on the market. Balderton Capital‘s  $400 million fund also made headlines. Similar to Northzone, Balderton is an early-stage investor with a focus on both Series A rounds and the EU market.

Europe

Anecdotally we’re seeing optimism regarding the European startup scene, at least from a venture perspective. TechCrunch reporter Steve O’Hear said while reporting himself on the Northzone raise that it was the fourth new EU-focused venture fund that he’d covered in a week, for example. (It isn’t hard to find other, also-bullish notes on Europe.)

The data bears out the point. Of the 1,243 known venture rounds in Europe worth $50 million or more, 243 have been raised in 2019, or just under 20 percent. That one in five larger venture rounds in Europe’s history have been raised inside the last 12 months is notable.

Raising the stakes to $100 million, we can find record of 626 known venture rounds in Europe from any time period. Of those, 135 have been announced so far this year. That’s nearly 22 percent, an even greater share of the historical total than what we saw at the $50 million threshold.

From a venture perspective, then, Europe-based startups have good access to capital in both large, and very large doses. And with Northzone and Balderton out in the market with new, early-stage focused funds it must be good times to be a startup based inside the Schengen Area.

Illustration: Li-Anne Dias.

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