???????? Hi friends!
I’m off to Italy (again!) for a long weekend as a surprise trip for my wife. We’ll be celebrating her birthday with her family out there for the first time in over 20 years ????
So this newsletter may be a little bit lighter than my normal verbal extravaganza!
For this week’s Lowdown, I thought I would highlight some of the reasons to be positive about the state of venture today.
There’s been a couple of huge announcements here in Europe and one that’s not quite as big in Kenya, but it’s important nonetheless!
???? Atomico raises 1bn Euro
???? Dawn bags $700m
???? Greylock lands $1bn
▶️ Enza Capital closes $58m
Keep reading to get the full lowdown on each of these…
And remember to check out this week’s Nothing Ventured pod where we take a look back at some of the operators we’ve had on in Season 4, sharing all their wisdom.
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Now let’s get into it.
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The Lowdown
You would be forgiven either whilst reading this newsletter or, indeed venture news in general, for thinking that the venture ecosystem was in a pretty sorry state.
Indeed articles like this one from Pitchbook paint a picture of an industry struggling to get out of declining returns with IRR dropping into massively negative territory in 2022 as hyped up valuations started getting marked down.
But the reality is that despite those declining returns, there is still a huge amount of dry powder out there waiting to get deployed.
LPs are still looking to deploy into funds that they think can still generate those outsized returns of yore.
So let’s take a peek at some of the firms that have just announced new mega funds as well as one slightly smaller, but still important, fund in the context of the region it’s in.
Atomico Raises 1bn Euro
First cab off the rank is Atomico which has raised 1bn Euros, with a bullish stance on where Europe is heading.
Despite the continent seeing a likely 39% decline in funding in 2023, this new fund which will be deployed across venture and growth is testament to the fact that founding partner, Niklas Zennström, believes that Europe has the chance of becoming a true tech superpower. It’s evident that there’s huge value to be unlocked by the continent!
Some might argue that regulation is a limiting factor, but I think in some ways, the tougher regulatory environment in Europe means that new ventures have to think hard about how and what to build in a more meaningful way. It prevents them from assuming they will just be able to fix their problems by throwing cash at them down the track.
With over 200 investments including Klarna, Graphcore, Lime and Gympass across 5 funds, it looks like Atomico is just warming up.
Dawn Capital Bags $700m
Next up, we have Dawn Capital that just raised a $620m early stage B2B software fund alongside an $80m follow on fund.
With $2bn now under management, the fund has backed companies like izettle which are now ubiquitously used in stores to capture card payments and which exited to Paypal, as well as others like Dataiku and Quantexa.
As co-founder and GP Norman Fiore says, we are on the cusp of the next technilogical platform shift driven by AI and Dawn wants to be at the front line to capitalise on the opportunity.
Greylock Lands $1bn
Across the pond, Greylock Partners has launched a $1bn fund to focus on early stage businesses from Seed to Series A.
This, despite the fact that Reid Hoffman (founder of LinkedIn) who has been a GP in the fund since 2009, announced around a month ago that he would be scaling back his involvement and would not be heavily involved in this new fund.
It would seem that Reid will be focussing his time on exploring the AI landscape, just not from within Greylock.
The new fund – Greylock 17 – will focus on Pre-seed, Seed and Series A investments. The fund hopes to grow their track record of over 250 exits including Redfin, Aurora and Coinbase.
Enza Capital Closes $58m
And finally, I wanted to give a shout out to the little guys! You’ll see that in the upcoming season of Nothing Ventured we try to explore the African ecosystem a bit further. I thought it would be great to juxtapose Enza Capital’s recent announcement of its $58m close across 2 funds.
Given the size of the 3 funds we just looked at, which on a standalone basis total almost $3b, you may be asking why I’d be looking at such a small fund.
Well, everything needs to be taken in context.
Firstly, the largest Africa focussed fund, Partech Africa II, sits at 245m Euros. This $58m is over a fifth of the size of that fund.
Secondly, this Enza has been deploying pan Africa across Kenya, Uganda, Nigeria, Ghana, Ivory Coast, Senegal, Egypt and South Africa which is great to see.
And finally, in a move that really shows that they are founder focused, they have reserved 10% of their carry pool for founders – though this won’t necessarily be equally shared.
The point is, it’s easy for us to get carried away with and fixated on the massive numbers we’re seeing here in Europe and across the pond.
But it’s worth remembering that in some markets, you can have a much smaller base but much bigger impact.
And finally, a word from everyone’s favourite meme master…
People in 1980: “I can’t wait for flying cars and all the other amazing inventions we will come up with in the future”
People in 2023:
— Dr. Parik Patel, BA, CFA, ACCA Esq. (@ParikPatelCFA)
Oct 1, 2023
????And that’s a wrap for this edition of The Lowdown – I’d appreciate your feedback so just reply to this email if you’ve got something you’d like to say.
???? And if you think someone else might love this, please forward it on to them,
???? Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.
That’s it from me so until next time…
Stay liquid 🙂
Aarish
