Targeting Next $1B+ European Exit, Hoxton Ventures Pulls Back Curtain On New $40M Early-Stage VC Fund

What’s this me old mucker? London has bagged itself a new early-stage VC.

Although it’s already made several investments, Hoxton Ventures, founded by Accel and Fidelity alums, Hussein Kanji and Rob Kniaz, is officially pulling back the curtain today. It’s announcing the closing of a $40 million “microcap” fund targeting startups in Europe, with the aim to find the next billion dollar-plus success story in the region.

“We’re entirely outlier driven, meaning we want to find companies that will become $1b+ companies,” Kanji tells me. “If you present a company to us where we are guaranteed to make 3-5x, but there is no potential of being 30-50x, it’s a pass for us.” That’s certainly big talk for the newest kid on the European VC block.

Specifically, Kanji says that Hoxton Ventures will typically invest between $1-2 million, making between 4-6 investments per year, since the next $1b+ startup doesn’t come around too often (as few as 1-2 annually). That’s potentially filling a gap between the seed round and the higher end of a Series A, though these definitions vary widely. It says it also plans to follow-on for all of its investment in any subsequent rounds.

What that next billion dollar European startup will look like, however, Kanji says they’re targeting entrepreneurs “who want to not just bring a great technology or value proposition to market, but are inventing entirely new industry categories”.

As an example think back to 2004-2005 when it wasn’t clear what a social network was. Or 2007-2008 when Facebook released a developer API and we hadn’t yet seen what could be built on top of that shift.

“This is often murky in the early days,” notes Kanji. “Personally, I remember folks telling me no one was ever going to play video games on Facebook when we did Playfish at Accel, and that Facebook was for fun, lightweight applications like birthday cards. We don’t mind making these kinds of bets into new markets, if they can scale to large outcomes.

“We have a thesis that the best companies in our industry are built by founders, often by founders who are doing it the first time around. We focus on helping them build around them so they can scale not only the business but themselves.”

Like almost all of the new early-stage VCs that have set up shop in London (and elsewhere in Europe) in recent years, Hoxton Ventures is talking up its entrepreneurial or operational experience. Before becoming VCs, founding Partners Kanji and Kniaz had roles at Microsoft and Google, respectively, and bring significant Silicon Valley experience to the table.

“We’re well connected in the Bay Area ecosystem and can open doors,” says Kanji. “We think that ecosystem is incredibly important, even in Europe. That’s where the best and brightest talent lies, that’s where the industry collects information and knowledge, that’s where a lot of the partners are for businesses in Europe and ultimately that’s also where the buyers are.”

Meanwhile, serial entrepreneur and investor Dylans Collins has been recruited as a Venture Partner, which potentially makes this new fund even more interesting. Collins has founded and sold three companies; Jolt Online Gaming (acquired by GameStop), DemonWare (acquired by Activision Blizzard), and mobile messaging company Phorest (acquired by MBO). He’s also currently doing interesting things with his latest SuperAwesome venture.

Despite only announcing the fund today, Hoxton Ventures has already made three investments; Campanja, Tizaro, and one that has yet to be announced. Prior to its closing, Kanji and Kniaz invested in two additional companies; Llustre (acquired by Fab), and GoCardless.