Holtzbrinck Ventures

Breaking: Holtzbrinck Ventures and HarbourVest closes €177m early stage fund

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We’ve just learned that German VC Holtzbrinck Ventures will announce that it’s closed a whopping €177 million early stage fund tomorrow. The Holtzbrinck Ventures Fund IV is backed by both Georg von Holtzbrinck publishing group and funds managed by HarbourVest Partners, a global private equity investment firm.

This is a significant new fund for European standards and will fundamentally help prosper and establish consumer web startups from all walks. Current investments and holdings include highly successful ventures, such as Zalando, Groupon or the freshly exited brands4friends.

With the recent re-structuring at Holtzbrinck, a new corporate identity and the following shut down of the so-called incubator “eLab“, these developments now also entail that the fund will be operated and managed independently and solely focused on early stage Internet startups.

Martin Weber, Partner of Holtzbrinck Ventures, says that “the level of support shown by our existing investor Holtzbrinck has been very encouraging, and we are also delighted to welcome HarbourVest as a new investor both of whom we look forward to working with in the coming years.”

Holtzbrinck also claims that the new money will be used for a pragmatic and simple funding approach for fresh ideas and disruptive startups coming out of Europe. There is definitely need for a fund of such size that also has a strong existing portfolio.

  • http://jetlib.com/news/2011/01/10/holtzbrinck-ventures-and-harbourvest-closes-e117m-early-stage-fund/ Holtzbrinck Ventures And HarbourVest Closes €117M Early Stage Fund | JetLib News

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  • js

    It’s great these guys have closed our their fund, and congrats to them, but “whopping”? How can €117m possibly be whopping for an institutional fund raise?

    Do the math: they have four partners, two principals, and seven other staff, two of whom look senior. Assuming the junior ones cost an average of €50k each loaded, two senior ones cost €125k each, then €150k for each of the principals (ungenerous) plus an office, and other G&A. Let’s say that’s half the fees all told. That only leaves €250-300k for each partner.

    It’ll pay the mortgage, but it’s hardly a gravy train if you’re a senior investment professional.

    Unless there’s carry. But then you have the other challenge of a sub-scale fund: to cover risk you need to spread €117m across at least 20~25 investments. That’s only ~€4m per deal, once you’ve factored in years of management fees. But even that number, €4m, assumes parity allocation. Which is false.

    You actually need to hold 30-50% of the funds back to defend positions in your winners, so you can only really write €2m equity checks.

    So. Takers for a whopping €2m series A? Anyone?

    • http://www.zinnaglism.com Lukas Zinnagl

      €2mio series A is whopping (for Europe), yes. It’s also realistic, necessary, good and authentic for a consumer web startup

      • js

        €2m series A is not whopping for anywhere. It’s small. European start-ups that are seeking to achieve venture-class returns operate in the same economic universe as US start-ups on the West Coast, or Israeli start-ups, or Boston ones, and have roughly the same funding needs when they’re competing on a global level. Their b2b portfolio are competing for the same dozen investment banks as clients, and their b2c portfolio is competing for the same share of attention and Twitter and Facebook, the same share-of-wallet as Zappos and Amazon.

        That’s also why bulge bracket funds in Europe are the same size as bulge bracket funds in the US: funds like Accel, Index, Northzone, Wellington, Sofinova, etc. are “normal sized” venture funds big enough to do Series As in business with global-class IP and then follow those rounds when their portfolio cos need more money.

        That’s also why those funds can achieve venture returns and back companies like Spotify, Playfish, Skype, etc., which hold their heads high against US competitors.

        (When they don’t sell out too early, at any rate.)

        I’m not having a go at Holtzbrinck, which I’m sure is a great fund with a great team and a kickass portfolio, just pointing out that €117 (or 177) is not whopping. It’s fairly small, and will constrain the firm’s investment strategy and bar them from the top table of global deals.

  • http://www.zinnaglism.com Lukas Zinnagl

    Really sorry, but I made a mistake.

    It’s €177 million they’ve raised, not €117.

    Sorry for the misunderstanding

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  • Tom

    An if there were really smart, they would have converted Studivz to 5% of Facebook. but they did walk from the deal which was ready to seal. 2,5bn right now.

    • Dirk

      So right. I don’t think that it was all in their hands, though, as the StudiVZ guys are notoriously difficult to work with…

  • Tom

    An if there were really smart, they would have converted Studivz to 5% of Facebook. but they did walk from the deal which was ready to seal. 2,5bn right now.

  • http://ohsugar.com.au/2011/01/10/holtzbrinck-ventures-and-harbourvest-closes-e177m-early-stage-fund/ Oh, Sugar! » Holtzbrinck Ventures And HarbourVest Closes €177M Early Stage Fund

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