Following on from its announcement that it would invest in other early-stage VC firms in Europe, and doing so by investing in the UK’s Seedcamp, and Episode 1 Partner, Draper Esprit, the publicly-listed VC firm based in London, has run a stage further. It’s now acquired Seedcamp Funds I& II for PS17. 9 million( EUR2 0 million/ $23.6 M ).
The original Fund 1 sizing was EUR2. 5m and was raised in 2007, while the Fund II size EUR5. 2m and was raised in 2010. The move delivers a 4x return to the LPs that invested in those two funds, and also means Draper Esprit will pick up a minority( but a significant minority) stake in fintech unicorn TransferWise.
Seedcamp’s Fund I, launched in 2007 and Fund II, raised in 2010, comprises some high profile companies including Codacy, Edited, Erply, Fishbrain, Codility, Winnow, Codeship, and Try.com among others.
However, Seedcamp said it would continue to operate “as is” and the work of its third money “is unaffected as part of this.” In other words, Seedcamp continues to have wiggle room with its third fund.
As part of the bargain, Seedcamp will continue to manage the companies as part of the sale. It also simplifies Seedcamp’s LP structure, moving it from having multiple LPs to only one. It also means Seedcamp will have access to follow-on investment from Draper allowing it to invest all the way from Seed up to a B-round.
Meanwhile Draper Esprit, a publicly floated VC, yesterday reported 44% annualised growth across their portfolio over the past 6 months. Draper Esprit portfolio’s last reported NAV was PS23. 5 million( EUR2 6.3 million ), resulting in an increase of PS5. 6 million( EUR6. 3 million) (~ 7p per share ).
Seedcamp Co-founder and Managing Partner, Reshma Sohoni, commented: “We are thrilled to help our Seedcamp companies scale to the next level with the support and firepower of Draper Esprit. As the Seedcamp team continue to manage Fund I and II, Draper is the perfect partner to help us manage these businesses.”
Seedcamp Managing Partner, Carlos Eduardo Espinal, added 😛 TAGEND
“We see this as a great outcome running alongside experienced and knowledgeable investors who’ve supported us for many years. We are always looking at innovative ways to deliver exceptional returns to our LPs and believe this transaction is a win-win for everyone involved.
Simon Cook, CEO Draper Esprit plc commented: “Although principally a primary series A, B and C VC Growth investor, we have also been very active over the years as a secondary tech investor in Europe having acquired a number of well-known VC portfolios and increasingly taking big direct stakes in later stage companies. Together with our recently announced seed money of monies strategy we can offer long term patient capital solutions for all European tech companies and their investors outside of the constraints of a typical 5+5 year money. This acquisition further bolsters our growing secondary business; increases our exposure to a really good portfolio of European technology companies including Transferwise, one of Europe’s most successful startups.”
A Seedcamp spokesperson added that its investment and ops squad would not be affected by this deal and won’t be working for Draper in any other route than they would be accountable to other LPs.
Overall this looks like a great deal for all parties. Draper Esprit acquires a decent portfolio at a stroke and Seedcamp now gets access to later stage funds.
Seedcamp was constrained by the 5+5 years investment model that meant it had to sell off their companies. Now they don’t, because they’re funded by a publicly floated single investor that doesn’t have a 5+5 year timeframe, and can expend from Seed to Series B.
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