The definitive guide to London Seed Venture funds — Sep 2018 edition
You know what: most entrepreneurs still don’t know where to go for seed funding in the UK.
I came across this brilliant London-based founder who’d been courageously talking to investors all over Europe but had somehow missed all the most talented local seed funds . We can solve that — here’s the list.
Besides of course Stride.VC, I wanted to go beyond the stats and give you a detailed look into the funds investing into seed stage startups from London as their core business. Much of it is “in their own words” to give you a flavor of style and strategy and help founders target the right investors in the right way.
Hope you will like and share!
Note A: I cut if off at £30M so I’m missing out on SussexPlace, JamJar, London Venture Partners, ForceOverMass, FuelVentures, EC1 Capital, Ballpark Ventures, Charlotte Street, Rooks Nest and plenty of good others investors that a more courageous soul can go cover.
Note B: as you can tell I asked everyone the same set of questions to let the funds express themselves, I might make some modifications as I’m sure I will get corrections.
Here we go!
General Partners : Saul and Robin Klein
Marquee companies: improbable, transferwise, zoopla, citymapper, seedcamp, secret escapes, swoon, kano, moo + …
Allow me to call it as I see it — LocalGlobe is the best seed fund in the UK in terms of ability to spot and invest in leading companies. The strategy is macro focus bet on pre-seed & seed stage and UK as a source for global top quartile returns. With a relatively high velocity investment strategy, they lead by market share by quite a margin : since 1999, they’ve made probably around 200 pre-seed and seed investments with over 125 from their base in London & the UK. It helps of course they have been active for such a long time — but that’s the definition of situational rent and they’ve kept on evolving strategy and team to move with the times.
Here’s a good overview of their current strategy.
The question that was always asked was “how to do you move beyond the Klein brand” but they are in the process of answering that with now 8 partners and a nicely diverse group at that!
LG is famous for opening up its dealflow meeting to all comers on Monday, which is cool.
First Minute Capital (£85M)
One liner: We are backed by star technology entrepreneurs, and we aspire to be the most helpful seed fund in Europe.
General Partners: brenthoberman, Spencer Crawley, Henry Lane Fox
First Minute stands our for its entrepreneur-led LP base. They sit atop the Founders Factory ecosystem built by Brent Hoberman and co are led by the ever-helpful Spencer Crawley.
The funds fields a reasonably large team for small fund (3 partners and 4 associates) and are big proponents of the venture partner model (Steve Crossan from DeepMind, Arek from Index and Tommy Stadlen).
The fund is sector agnostic and anticipates a portfolio size of 50 to 60 companies with half the fund reserved for follow-on investments. They won’t take board seats and typically target a reasonable 10% ownership for initial ticket when investing in Europe; down to 5–10% in the US. About 70% of the fund will be deployed in Europe and 30% in the US (where they have invested alongside Khosla, NEA, Greylock).
The fund clearly contributes to and benefits from wider Founders ecosystem advantage (Forum/ Factory/ Keepers/ Intelligence).
This is a pragmatic team who just want to be smart decision-makers, empathetic investors and nice people :-)
Kindred Capital (£80M)
Tagline: Backing Founders with Spirit
Marquee companies: Kalo, FiveAI, Verve, Paddle, and LabGenius.
Beliefs: Kindred’s goal is simple: build the best seed fund in Europe. The pillars are four Es — energy, enthusiasm, experience, and empathy. The last one is critical, and one of the key areas we feel is missing in Europe — if you haven’t built and scaled a company yourself, through the gut wrenching ups and downs, your ability to empathise with the challenges of doing just that is very limited.
USP: “We think operating experience is so fundamental to building early stage companies, and often the best positioned person to give you advice is a fellow founder who is building their business alongside you. So we’ve baked that into our model and pioneered the model of “equitable venture” — sharing the carry of the fund with every founder we back, turning founders into partners in the fund and therefore into co-owners in one another’s success. We believe that the collective will get everyone further faster. We’ve now backed 20 companies and we are 50 carry partners in the fund. Turns out they’re not just great at peer mentorship, but they’re also our best source of dealflow, as we all know great talent gravitates to great talent, and there’s no one a founder trusts more than a fellow founder”.
Oxford Capital Ventures (£75M-ish)
CEO: Tom Bradley
Marquee companies: Push Doctor, Moneybox, Import.io, ePorta, Outplay
I don’t quite know where to peg Oxford Capital on size but given they are an evergreen fund raising c. £25m / year I figured £75M was a good estimate. Their typical deal size: £0.5m — £2m in initial investments in rounds of £1m — £5m in size.
Oxford Capital Ventures has actually been one of the most active investors in early-stage tech in the U.K. in recent months with 14 new deals in the last two years and a bunch more to be announced shortly. Its strategy is to identify parts of the technology market where the UK can produce world class or world leading businesses and to invest in those businesses at an early stage, typically when products are meeting markets, but before product market fit.
“Our core expertise is in helping companies in our target sectors navigate the challenges of growth from product launch to scale-up raise and we will continue to invest through Series A and B as they do this.”
Oxford claim deep strength in verticals such as fin tech, digital health, future of mobility and future of retail and horizontal technologies such as AI / ML, marketplaces and blockchain. I
In Tom’s words : “we care deeply about the entrepreneurs we meet along the way and think deeply about how we fit into the ecosystem to make ourselves easy to understand and to work with”. With this in mind they have developed they own system to track the quality of our interactions (i.e. a founder NPS). Nice!
Passion Capital (£69M)
Marquee companies: GoCardless, Digital Shadows, Pusher, Smarkets, Adzuna, Ravelin, LimeJump, Coinfloor, Nested, Spotahome, Focal Point Positioning, Prowler.io, Butternut Box, Tide and Monzo Bank.
Since 2011, Passion Capital has backed 67 companies and, in their own wrods “tried to set the bar for being the most founder-friendly early stage VC fund in Europe”.
“We try to do this by not wasting founders’ time, by always trying to be approachable, give honest and direct feedback (even if difficult!), by being transparent about what we do and how we go about doing it, and by working to add value whenever we can — even if that’s to get out of the way!”
Passion opened and are based in the very first tech coworking space in London, White Bear Yard, as early as July 2009 … before TechHub, Google Campus and well before wework popped up everywhere :-)
Their strategy is very simply to back the best founders across Europe, to treat them as you’d want to have been treated — and to hope that they recommend Passion to their friends who might be or become founders themselves in future. It’s with this very simple approach that Passion plan to deliver extraordinary returns to our own investors.
Managing Partners: Paul McNabb, Simon Murdoch
One liner: We are a dynamic venture team helping daring entrepreneurs create the future — and master the journey from Seed to Series A.
Marquee companies: Carwow (as marketplace), Triptease, Global App Testing, CloudNC & Passfort
Episode1 is a seed stage focussed, investing in the UK only, and focused on sales-oriented software driven businesses, including deep-tech and marketplaces).
The focus is on the “Seed to Series A” journey which means they invest at seed only which they define as a first institutional round of up to £2m, as lead investor.
The team “spend lots of time helping and coaching management team esp CEO — aim to be a lot more than just money. The main areas of help are go to market strategy, hiring and general strategic advice, led by the E1 director & observer, drawing in specialist talent on GTM and hiring. Episode 1 can be highly engaged because of relatively low deal volume, investing in only eightor so companies per year. Episode1 invest again at Series A and sometimes also at Series B, and stay on board as long as they can and continue to help.
From a strategy standpoint, they favour deep tech with some marketplaces investments and are staying away from pure b2c given fund size. Their model “works particularly well for companies from the best accelerators i.e. EF, Seedcamp & Techstars as very often they have technical founders who benefit from the mentoring”.
E1 pride themselves on “being frank and asking lots of hard questions”, but find entrepreneurs enjoy working with them to find the answers. They are trying to find the right balance in being both caring and challenging — “the Simon Cowell of the early stage market” :-)
Tagline: Europe’s Seed Fund
General Partners: Reshma Sohoni, Carlos Eduardo Espinal
Marquee companies: Revolut, UIPath, Transferwise and others.
Seedcamp bring a Europe-wide network of founders, operators, and investors in contact with top founders, wherever they start their journey’s from, to help them scale their companies globally.
The strategy is broken out into two parts. The first is pre-seed, which they’ve been doing since 2007. Seedcamp are willing to lead pre-seed rounds of up to 250K, where they make the first 100K investment. The second is a seed strategy, which started in Fund 3, whereby Seedcamp syndicate with other VCs as part of rounds they lead. Seedcamp write checks of up to £400K in seed deals where the round size is 2m or less.
Seedcamp aim to provide the infrastructure to give founders the best possible start to build breakout businesses that “change the way we live, interact and buy”. Seedcamp are “sector agnostic, passionate about early stage and keen to fast-track a founder’s vision and create value through immediate access to smart capital, a lifelong community of support and a global network built on over a decade’s experience backing exceptional talent”.
Seedcamp’s proposition and offering has evolved alongside that of the ecosystem as a whole. From a $2.5M accelerator in 2007 ( I was a founding investor and board member alongside Saul and Reshma) to a fully fledged seed fund now, Seedcamp have invested in over 260 companies and have created what they refer to as the ‘Seedcamp Nation’ of founders, operators, investors, mentors and ecosystem builders across the world who’ve really been through and seen it all.
While the investment approach and offering has evolved, “the core of Seedcamp remains the same” with founders and global community at the centre of everything they do. With 11 years investing in early-stage companies and 700 founders backed, “we have our own micro-economy where Seedcamp founders turn to each other and often get their first customers, unfettered smart feedback and a playbook of tried and tested tactics that can be applied to their own businesses”.
Connect Ventures (£50M)
Tagline: where product founders fit.
Marquee companies: Citymapper, Typeform, TrueLayer, Moltin and Fiit.
Connect is a seed stage fund that invests in ambitious founders across Europe. Their focus is to invest in purpose-led founders obsessed with solving hard problems at scale by creating software products and companies that people love.
Connect has backed 41 companies to date, with 55% based in the UK. They lead seed rounds and are willing to do 60–100% of a round, depending on the size. Typical round sizes are £500k to £1.5m, but they’ve led rounds as high as £2-4m.
Connect are truly low-volume, high conviction. They will invest in 25–30 companies per fund over a three year period, so each partner does only about 3 investments a year. The team take board seats and are actively involved with the companies, both at the partner level and through the founder network which they’ve actively invested in over the last two years.
Connect is known for being highly product focused. Best tagline :-)
Partners: Alex Brunicki, Andres de Haes
Tagline: Outliers, Audacity, Irreverence. Backed.
Marquee companies: Boiler Room, Verve, Oh My Green, Kalo (formerly Lystable), Hutch Games, CloudNC, Flexciton, Lab Genius,
Backed.vc get the prize for most stylish team in London (sorry Felix Capital).
They are a millennial team backing millennial founders building companies targeting our millennial generation with consumer products or solving problems faced by the next generation with automation-driven tech solutions.
They have, hum, backed over 25 companies in their first fund and are very focused on getting companies rapidly to a Series A, for which they have a strong track given how young the fund is.
Backed are a “community-based fund” (with Jenny Gyllander as Head of Community), de-facto co-developing brand, sourcing and support strategies with the portfolio companies. They organise events twice per week to bring together the founding teams they have backed. The core community-driven support function is Talent.
When investing, Backed.VC care obsessively about the strength of founders, over and above business and market characteristics.
Boiler Room, Verve, Oh My Green, Kalo (formerly Lystable), Hutch Games, CloudNC, Flexciton, Lab Genius,
USP : “Our youth (everyone in the team is 30 or under) helps us build trust-based peer-like relationships with founders: we surveyed the founders with whom we have partnered who say we are “deeply trusted” and “always approachable”.
Tagline: We’re a venture capital firm for founders backed by founders
Partners: Sean Seton-Rogers, Rogan Angelini-Hurll
Marquee companies: GetYourGuide, Made.com, Unity, Small Giant Games and onefinestay.
ProFounders has a very clear focus: “the lens that we bring to investing revolves around the customer experience. We look to invest into businesses that leverage technology to transform broken customer experiences. Technology being anything from ecommerce to blockchain…to transform means to reduce friction or make easier, cheaper or faster….crappy being major pain points….for both consumer (b2c) and businesses and their customers (b2b2c)”.
ProFounders believe that with early-stage companies, as an investor, you need to be local. They only invest into Europe and have invested into the UK, Finland (4 investments!), Germany and Spain.
ProFounders trades on candor: “We always promise founders that we will be completely candid with them. We are not cheerleaders….we want to help founders make the tough trade-offs they have to make. They will always have limited resources (people, money and time) and they cannot do everything at once. We want to help them allocate those resources for the best possible outcome….and to that end, we will call a spade a spade if need be. A founder will get brutal honesty from us.”
Hoxton Ventures (£30M)
Tagline: We help entrepreneurs invent new industries and disrupt existing ones.
Marquee companies: deliveroo, darktrace, algomi, babylon, behavox, superawesome, tourradar and yieldify
Hoxton is ambitious — backing founders “primarily inventing new market categories”. They are only interested if there is the potential to a large, valuable, global company and care more about the magnitude of the return if things work, and less about the risk.
Their preference is to take risks on people and products. Lots of founders are technical, domain experts or pursuing the project out of passion. First-time founders are welcome.
Hoxton try to be the first venture investor, investing between $250k to $2m, with reserve for follow-on rounds. They try to be actively helpful but “behind the scenes”. Great companies are built by great entrepreneurs, not venture capitalists
Rob and Hussein each have deep operating experience in the tech industry and “believe silicon valley matters”. Europe *yet* doesn’t have the financing depth, executive, product and technical management talent, and ecosystem of partners (and eventually, acquirers) for startups to scale into large, valuable companies — so they will work closely with founding teams to bridge to the us market. Rob is one of the few CSgrads in this biz in europe, whilst Hussein is a “lowly high school and MBA graduate”.
Partner: Alex Dunsdon
Marquee companies: Citymapper, Dojo, Verve (Streeteam) and Mrs Wordsmith
I broke my rule on covering MicroVCs because Alex is so damned smart & entertaining. Get this: SAATCHiNVEST invests in cult leaders who happen to be in tech. Drop mic.
Partners: Eddie Anderson, Marc Moens, Sandy McKinnon, Craig Anderson
Marquee companies: Fanduel; Nutmeg; Maxymiser; Acunu
Pentech are “founder-first”, early-stage ‘software’ investors. They have a “nuanced understanding” on ML/AI (deep) and data and their commercial attractions and challenges, particularly as applied to ‘full-stack’ opportunities with a current interest in strongly growing sectors that are ripe for disruption Fintech, Insuretech, Deeptech, Healthcare and Bio.
Pentech are happy to lead or co-lead deals and like to be the first VC investment — with the smallest cheque likely to be £500k — but who can invest up to £15m over the whole journey.
As a Team, all Partners have “strong entrepreneurial and operational backgrounds, and put forward a strong network and track-record in helping build companies across the whole journey, from founding to growth to successful exit”.
Pentech are more naturally disposed to building a concentrated portfolio of up to 25 companies rather than other more ‘probabilistic’ approaches. They are more comfortable with B2B opportunities, but “ever the contrarians based on validated insights”.
One liner: Frontline aims to be the best partner for b2b seed stage companies in Europe
Marquee companies: Logentries (acquired by Rapid7), Verve, QStream, Boxever, Currencyfair and others
Frontline were the first VC in Europe who focused on community or platform and spend over 15% of the fund budget every year creating scalable ways to add value to its founders, whether that is through content, events, or peer-to-peer learning across the portfolio. They have a strong focus on helping their portfolio expand globally and even wrote the first guide on how to expand a European company to the US. Sixty percent of the portfolio have international investors (US or Asian) by Seed or Series A.
Frontline invest at B2B Pre-seed and Seed — 50% of its investments are pre-product and 75% are pre-revenue. The team is half London half Dublin and is happy to invest anywhere in Europe.
General Partners: Scott Sage, Krishna Visvanathan, Andy Leaver
Marquee companies: Tessian, Aire, OpenSensors, Prodo and re:infer
Crane works with European startups building products for enterprise customers where data plays a central role — they refer to this as “Intelligent Computing”with a focus on Pre Series A enterprise companies in Europe.
Krishna and Scott have invested as team and led investments in every major European startup ecosystem over the last 10 years, in some of Europe’s best companies — Trustpilot, Lyst, Onfido.
Anthemis (fintech and more, £80M)
Tagline: Digital Native Finance
Marquee companies: Climate Corporation, Betterment, Currency Cloud, Trov, Monese, Truelayer
Sean Park, Amy Nauiokas and their merry band of fintech specialists have built a strong franchise around “cultivating change in financial services” since starting the business back in 2008.
Anthemis are hence a strongly thesis driven investor in the reconfiguration of financial services. They have a current portfolio of over 60 companies across the whole industry landscape.
Anthemis is unique in the way it built itself as a kind of one-stop shop that includes company creation (Foundry), an advisory business, in-house recruitment and intelligence and research, all centered broadly around the core topics of financial markets disruption.
Besides the main fund, Antemis has also created dedicated vehicles with a number of corporate sponsors, including La Baloise, Unicredit and Exponential.
This differentiated approach to has allowed them to build a unique ecosystem for our founders to leverage. Their absolute focus means they will happily invest globally in their chosen vertical but they have been very active with local companies as well, including recent investments in the likes of Abaka or Unmortgage.
Initial Capital (gaming and consumer, £50M)
Marquee companies: Supercell, Nexmo (sold to Vonage), Riffsy (recently sold to Google) and Space Ape (sold to Supercell)
Founded in 2010 by the founders of Playfish and the advisors associated with them, Initial are self-funded with no institutional investors with all the freedom this entails.
While they were known for mobile gaming companies, they are now more focused across a broader spectrum of social media and digital early stage companies.
Initial do Seed and early Series A rounds only, often lead rounds but are happy being a co-investor as well — they will however always want a Board or Observer seat. They typically do 5 to 6 investments per year.
Their MO is to be proactive and hands on, but they also do not want to interfere with the management team and want to be a resource.
Piton (network effects, £38M at seed)
The defining characteristic of Piton is a specialisation on network effects — platforms that aggregate and coordinate supply, demand, and data to create them. The portfolio consists almost exclusively of formats that exhibit Network Effects — classifieds, exchanges, marketplaces(often SaaS-led), booking platforms, narrow UGC data sets.
Whilst by announced fund size Piton will go at them at any stage in amounts up to €20m if we think they are or might be the one. Hence their investment behavior hasn’t looked much like micro or seed. They predominantly later stages and often in quantum quite inconsistent with micro. For example:
For example they led the series B at Auto1 (with €9m equity cheque, €10m debt) but also did A, C, and D, making them one of the largest stakeholders.
The team do run a series of small funds which is why I included them in this post.
Illuminate Financial (£30M+)
Partners: Mark Beeston, Mark Whitcroft, Mark Rodrigues
Marquee companies: CloudMargin, Privitar, dv01, TickSmith, ChartIQ, Axe Trading, RegTek Solutions, TransFICC, FeedStock
Illuminate “are/aim to be” the leading VC firm in enterprise fintech. They invest globally with a natural focus on financial services hubs out of offices in London and NY, both at Late Seed and Series A.
“We only invest where we think we can make a difference.”
Everything the team does is focused on “increasing our leverage into the financial services tech ecosystem” — that’s everything from network, track record, team experience, industry partnerships, portfolio company synergies, acquirers, advisors, pipeline of talent for portfolio companies, etc…
IF work closely with eight $10Bn+ financial services organisations to pre-validate solutions and hopefully drive adoption for their portfolio companies.
IF are currently raising their second fund.
THE COMPANY BUILDERS
Entrepreneur First (£40M)
General Partners: Matt Clifford, Alice Bentinck and Joe White
Marquee companies: Tractable (EF3), Magic Pony (EF3), Automata (EF4), Open Comos (EF5), Cleo (EF5)
EF is a talent first company builder — “we take exceptional founders pre-team and often pre idea, fund them and shape them into world class startups, and we do this at scale.”
EF believe the next generation of great companies will be deep tech companies, founded by a limited number of exceptional founders who have the skills to execute them. EF looks to support a disproportionate number of these founders through the program, and therefore be in a large share of the best companies.
EF is building a scaled model, now working in London, Paris, Berlin, Singapore and Hong Kong that seeks to dominate this “pre-company” stage.
Forward Partners (£60M)
Marquee companies: Appear Here, Wonderbly and Thread
Forward back great founders like the rest of us but stand out for the support they can provide their portfolio: real execution capabilities as well as the usual VC bundle of cash & advice — founders can lean on the team to get stuff done quickly whenever they have a need — be that hiring, support with growth, product, branding, UX, tech challenges, or PR.
Forward come in super early stage — pre-seed (often just an entrepreneurans a plan — pre-revenue, pre-product, pre-team) and seed stage —investing from £300k to £1m.
The team has worked closely with 19 startups now and are all passionate about using this experience to help its companies grow faster.