Balderton closes $600M fund, its biggest yet earmarked for early-stage investments

Funding for European startups is at a record-high so far for this year, with €73.7 billion raised in the first three quarters, and the full year on track for more than 8,000 deals, according to research from PitchBook. To keep up with the pace, London firm Balderton is today announcing its latest fund, a $600 million war chest targeting early-stage investments.

The fund is Balderton’s biggest yet earmarked for seed and Series A bets, and it comes five months after the firm closed a $680 million fund for later and growth-stage investments, bringing the total funds to over $1.2 billion.

Balderton has traditionally been seen as one of the big four VCs based out of London — the other three being Accel, Atomico and Index. In years past, it held the distinction of being the most active of all early-stage investors in the region.

These days, in part because there are so many more companies launching and growing, we’re seeing a significantly bigger presence from a wider range of investors. The deep-pocketed SoftBank — which is investing with gusto from its latest Vision Fund 2 — Sequoia and Andreessen Horowitz, along with a number of new and newly raising European funds, have all shifted the dynamics in the market.

Nonetheless, the size of this latest fund, and the fact that it’s coming from Balderton, are bellwethers of the state of the market and the opportunities within it.

Balderton will be investing about half of the fund in seed stage investments and keeping its interests category-agnostic, Suranga Chandratillake said in an interview.

These are typically on the smaller side, and even though recent years have seen them growing with rounds reaching into post-money valuations as high as $100 million, it speaks to a wide range of companies coming into the Balderton fold. The VC has made some 300 investments in the last 21 years, and it said that it has made 20 investments since the start of this year, including Primer, Hubilo, Beauty Pie, Dream Games and more.

The fact that so many more companies are finding the ability to scale in Europe is one reason that Balderton launched and raised a large growth fund. That expanded remit, meanwhile, also means more risk-taking in the early bets that Balderton is willing to make, and it’s one reason they are glad to have more investors with deep pockets in the region.

“If you met great moonshot teams in the past, you knew in your heart of hearts that money would run out,” said partner Rob Moffat. “Today, you can say with a high chance it won’t fail, because there are others who will invest.”

The remaining half will primarily focus on following on previous investments, supporting those startups already in the portfolio.