London-based Passion Capital has raised a second fund for investing in early stage U.K.-based startups — today announcing a coffer of £45 million ($69M) to power its next phase of investments.
Passion Capital Fund II is another ECF (Enterprise Capital Fund), so the U.K. government is providing a portion of the funding (via the British Business Bank) as was the case with Passion’s first fund. This time the taxpayer is contributing £17.5 million of the pot. Other investors in the fund include family offices in Europe and across Southeast Asia.
The firm said today that it intends to continue its strategy of investing more like “super angels” or a “micro VC” rather than a traditional VC, and still fully focused on the earliest stage tech and digital companies.
Passion partner Eileen Burbidge tells TechCrunch it’s expecting to make between 30 to 35 investments in total with fund II — so “potentially slightly fewer” than it made from its first fund in order to bump its first seed cheque averages from £193k to around £250k — “for greater ownership”.
Passion Capital’s first fund launched back in April 2011. That fund comprised £37.5 million ($60 million) to be invested in what they said at the time would likely be around 50 startups.
The projection was not far off; in the event Passion has backed 42 companies over the past four years — which have collectively raised £124 million. The total value of its portfolio to date is pegged at £407 million.
Other performance data it’s releasing today includes that its average seed stage first investment is £193k and its average first ownership taken is 14.3 per cent. Average ownership at present (including exits) is 15.2 per cent.
Passion Capital is also putting a public figure on its own performance: which it says works out as a 3.13x value multiple (on average) of the first money invested. It’s also listing a 32.7 per cent Gross Internal Rate of Return at this stage. And 1.64x TVPI (total value vs paid in (capital).
Three of its portfolio companies have had exits/been acquired so far (namely: Mendeley, Picklive and Readmill) which isn’t bad going for such an infant fund. While five have hit the deadpool: Bonfire, Duego, Loopcam, Tripbirds and Vinetrade.
Passion also specifies that six of its portfolio startups are still on the seed runway, and 28 are still active — with follow-on funding at increased valuations.
While the fund itself is young, Passion’s partners have long been seasoned tech industry players — Burbidge herself was the third employee at Skype, back in the day. So what has the team learnt over its first four years as Passion? “It really is the founders who make the difference (reinforcing our belief pre-fund I based on our own experiences),” she says.
“There are many more early stage/seed funds now in London (I believe we were the first, and certainly the first of any size/scope based in east London) — but we think that’s absolutely brilliant, and a very positive thing for the ecosystem,” adds Burbidge.
“We act as we’d want VCs to act towards us as founders — or towards our existing founders — and therefore are confident we’ll get to partner with the founders we want to. Meanwhile, the ecosystem could certainly do with more investment capital — and more ambitious and innovative founders.”