Kindred Capital, the London-based VC that backs early-stage founders in Europe, has closed its second seed fund at £81 million.
That’s only a tad larger than the firm’s first fund, which invested in 29 companies and was raised in 2018. Portfolio companies from fund one include Five, which is building software for autonomous vehicles; Paddle, the SaaS for software e-commerce; Pollen, the peer-to-peer marketplace for experiences and travel; and Farewill, which lets you create a will online.
However, perhaps what really sets Kindred apart from most other seed VCs is its “Equitable Venture.” This sees the founders it backs get carry in the fund, effectively becoming co-owners of Kindred. Once the VC’s LPs have their investment returned, like the firm’s partners, the founders also share any subsequent fund profits, as long as they have passed the vesting period.
More broadly, Kindred says the idea is this extra incentive encourages a collective model, in which founders actively help each other achieve their goals. “This has also had a positive impact on deal flow, with entrepreneurs sourcing 38% of Kindred’s deal flow at the top of the funnel,” says the VC.
Notably, Kindred projects that around £5 million will be returned to founders from the first fund, profit that would otherwise have gone to its own general partners. Presuming those exits are realised, based on two founders per startup, a quick back of the napkin calculation suggests that’s just over £80,000 each.
Meanwhile, Kindred already begun investing from its second fund. It has led 10 seed investments in companies such as BotsAndUs, Gravity Sketch and Beit.
LPs in fund two include: University of Chicago, Industry Ventures, Generation Ventures, Sands Capital, British Patient Capital, Isomer and Legal & General. Founders such as Taavet Hinrikus (TransferWise), Carsten Thoma (Hybris) and Rishi Khosla (Oak North) have also invested in Kindred’s second fund.