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With three unicorns under its belt, Hoxton Ventures outs ~$100M second fund

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With three unicorns under its belt, Hoxton Ventures outs ~$100M second fund

Hoxton Ventures, the London-based early-stage VC agency finest identified for backing British unicorns Babylon Health, Darktrace and Deliveroo, is saying its second fund, which has closed at rather less than $100 million.

That’s greater than twice the scale of the agency’s $40 million debut fund again in 2013, when new VCs establishing store in Europe had been nonetheless seen as a novelty. How the ecosystem has blossomed since then.

Founded by Rob Kniaz and Hussein Kanji — Fidelity and Accel alums, respectively — and joined final 12 months by new associate and chief working officer Rob Ludwig, Hoxton’s self-proclaimed technique is, and at all times has been, to hunt out startups that may scale globally into “massive, category-defining leaders” in nascent industries. It is sector-agnostic and usually invests between $500,000 and $5 million into pre-seed, seed and Series A stage.

“We’re intentionally anti-thematic technique, simply as we had been within the first fund,” Kanji tells TechCrunch. “Our job is to again tomorrow’s international tech winners from Europe. We really feel most of those come from new market classes that [are] solely now being born.”

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“We even have a wider check-size vary than some funds as we allocate a small portion of the fund to pre-seed firms, the place we are able to take some riskier bets, the place we’ve specific conviction across the founders themselves or a sure market,” provides Kniaz. “It might be years earlier than quantum computing is able to be commercialised, for instance, however we predict it’s necessary to have some publicity there to founders we predict are distinctive.”

To date, it’s a method that seems to be paying off. The agency’s portfolio is at present valued at greater than $7 billion in combination, whereas Hoxton’s first fund has the best ratio of unicorns to investments, in accordance with Dealroom.

Digging a bit deeper, there have been 17 firms backed in fund one, which has to date helped to supply three unicorns, six acquisitions and two restarts (“one good, one unhealthy,” says Kanji). “Ten are nonetheless going, however one in all these is strolling lifeless, and don’t even get me began on the unhealthy restart. Of the remaining eight firms, I’d say a handful have a shot at greatness. Behavox raised $100 million earlier than the pandemic, and we’re massive followers of what Dylan [Collins] and his crew are doing at SuperAwesome.”

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Meanwhile, trade observers have identified that Hoxton has been making an attempt to get this second fund over the road for some time, however not all people would have been conscious of the way in which Brexit disrupted the VC’s personal fundraising efforts, earlier than the U.Okay.’s British Patient Capital stepped in to turn out to be Hoxton’s anchor investor.

Although nearly all of this second fund was closed (however not introduced) in early 2019, Kanji, who describes the crew self-deprecatingly as “horrible” fundraisers, says the VC had a “actually awkward expertise with the European Investment Fund, which set us again by at the least a 12 months.”

“Yes, sadly EIF denied this publicly however they discontinued new fund relationships within the U.Okay. after Article 50 triggered, in order that price us a major period of time as a result of size of their course of,” says Kniaz. “By that point we had different commitments that had timed out, so we in all probability had after which misplaced after which re-raised practically half of what we ultimately raised. British Patient Capital had been nice within the course of although and helped guarantee we had some continuity as an anchor investor. We’ve been so happy to work with them.”

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To that finish, the brand new fund started investing in early 2019 and has already made 20 investments throughout a variety of sectors, together with seed investments in FabricNano, a next-generation enzyme enterprise; Fy!, a homewares market; Kheiron Medical, a man-made intelligence radiology startup; and Preply, an internet training firm. I’m additionally informed that roughly one-sixth of the fund’s investments up to now had been made after the beginning of the coronavirus disaster.

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