One of the more prolific VCs in Europe with close ties to e-commerce startup factory Rocket Internet has closed another fund — its biggest yet — to back more consumer internet businesses in the region and beyond, with an emphasis on e-commerce. Holtzbrinck Ventures has raised €285 million ($331 million) for HV Holtzbrinck Ventures Fund VI, which will be used for early, middle, and late-stage investments, ranging from around $500,000 to $50 million per round.
“The new fund is larger than the previous ones and will allow us to deploy more capital across the lifespan of a startup,” a spokesperson tells me.
We’re in a heady period for venture investment at the moment. Dow Jones VentureSource this week released figures that noted 2014 VC investments totalled more than $52 billion, up 47% compared to 2013.
That’s partly fuelled by unicorn-sized rounds for the likes of Uber and other late-stage companies, but also the bigger, ongoing surge we’ve been seeing for a while now around the wider field of tech startups and the search for the next big tech phenomenon, or at least bright exits of interesting companies to existing juggernauts.
Holtzbrinck Ventures is tapping into that. It says this fund was not only its biggest yet, but it closed in less than four months and was oversubscribed.
HV — which first opened for business in 2000 as the investment arm of the German media and publishing group but went independent in 2010 — has also been one of the firms leading the VC charge in the tech world. As an investor in Rocket Internet, the firm has piggy-backed on a lot of the Berlin-based incubators’ prolific e-commerce startup creation in Europe and emerging markets.
HV has also upped the ante by directly putting in more money to fuel the aggressive expansion/funding that has helped some of the more sticky of these grow, with stakes in e-commerce marketplace Lazada, HelloFresh (food delivery), Paymill (Stripe clone) and Payleven (think Square) among them. It’s also funded e-commerce startups that are not Rocket Internet-created by share some DNA by way of founders and employees. Those have included Quandoo, an OpenTable competitor.
A spokesperson for HV tells me that this will be the template for many of the investments going forward, but with a more likely emphasis on B2B2C rather than straight-to-consumer marketplaces. Think “Stripe” or “Airbnb” rather than “Amazon.” That is not too surprising: the marketplace category is dominated by economies of scale, and at the moment that makes it risky for new businesses trying to compete against the likes of Amazon and eBay out of the U.S., Alibaba out of China, or indeed the outfits in emerging markets started by Rocket Internet. (Fab is one of the many that has stumbled trying.)
While Holtzbrinck has been active in emerging markets (on its own and alongside Rocket), it remains bullish on investing in European companies too. “it’s still possible to build relevant startups in Europe for e-commerce,” the spokesperson says, “maybe not in categories with proven business models but in new areas.” As one example, he cites FlixBus, which was launched only a couple of weeks ago that is backed by HV and General Atlantic. Like RedBus in India, the company is tackling the antiquated bus and coach industry, by letting users access schedules and buy tickets online.
HV tells me it’s also hiring now — on the hunt for partners and associates to help the firm spend its money.
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