Northzone Closes On Fund 10, Its Largest At $1B

London-headquartered Northzone has closed on 1 billion euros ($1 billion), its largest fund to date and one of the largest funds raised in Europe this year. This fund is double the size of its previous fund of $500 million announced in 2018.

We spoke with partners Michiel Kotting, based in Amsterdam, and Wendy Xiao Schadeck from New York on the latest fund. The increased fund size for the early-stage venture capital firm signals an intent to move into the growth stages as well, said Kotting.

“The market is coming into maturity in Europe,” Kotting said. The new fund allows Northzone to support “top entrepreneurs all the way through their life cycle.”

Schadeck pointed to Northzone’s deep relationships with founders from seed through Series B. “It was very easy for us to have that conversation about growth,” she said.

“At that point, companies are still figuring out their full senior team, honing product market fit, first step of internationalization,” all areas in which early-stage investors are engaged, said Kotting.

Billion-dollar exits

The 26-year-old firm invests across Europe and the U.S., and is known for its early investments in Spotify, Kahoot! and Avito—all billion-dollar exits when the firm exited, where Northzone led their Series A.

Northzone raised its first fund of $8 million in 1997 to invest in the Nordic region. In 2012, the firm established its London office as it had already expanded to investing across Europe. In 2015, the firm hired its first team member in New York, which signaled its intent to invest in the U.S. as talent from Europe moved to the U.S.

Northzone has offices in London, Stockholm, New York, Amsterdam and Berlin.

The firm started raising its fund 10 earlier this year as the tech markets were already pulling back. “If you look at today’s market, obviously inventory in itself is very proven. Our overall track record is much more proven now than it was. The last two funds have already pretty quickly started to prove value, so I think those things coming together gave both the trust to the LPs to come in now,” said Kotting.

Investing in 2022

With the slowdown in the funding markets “we’re now able to take much longer on diligence and timing,” said Schadeck, who found there is less pressure to make quick decisions.

“Most companies have tried to go back to 24-30 months of runway. Most boards have sort of pushed companies to be relatively cash-efficient,” confirmed Kotting.

“There is so much opportunity in the market right now,” he said. “So there’s no doubt we can deploy this money, and hopefully do a good job at it.”

Illustration: Dom Guzman

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