As deep tech and AI explodes, European deep tech VC IQ Capital closes new $200M fund

European deep tech startups get another shot in the arm this week in the shape of IQ Capital’s new $200 million venture fund. The new fund takes its assets under management to more than $1 billion.

The London and Cambridge, U.K.-based deep tech VC has closed its fourth Venture Fund at that amount, while also launching its second $200 million Growth Fund to provide later-stage funding, primarily in its venture portfolio. This means the VC will be able to deploy capital across more funding stages.

Since its foundation in Cambridge in 2007, IQ Capital has invested in more than 100 deep tech startups such as Thought Machine (banking), Nyobolt (battery charging) and Speechmatics (speech recognition). It’s also had exits to Oracle, Google, Apple and Facebook, along with a number of IPOs.

Investors in Fund IV include global institutions, funds-of-funds, family offices and British Patient Capital, the largest LP investing in U.K. venture capital.

Kerry Baldwin, co-founder, managing partner, said deep tech investment was “at the forefront of investor’s minds, topping $17 billion in 2022.”

I asked her if it had been hard to raise the fund in this market: “Obviously it’s been quite hard to raise in this market environment, putting it bluntly. But we’re doing something different.”

“We’ve raised our flagship fund for deep tech and that’s where we invest every day, in really, really deep tech. These deep tech academics actually like us to come all the way through, like we’ve done with Thought Machine, like we’ve done with Speechmatics. But yeah, it’s been an interesting funding environment.”

Given the big debate going on around generative AI, I asked her if Europe is going to be able to compete with the major Big Tech platforms on that front.

“We’ve got exceptional talent in Europe. Generative AI has got a long way to go, but it’s not going to solve real-world problems just yet,” she said.

There’s been criticisms of how university spinouts are hampered by their alma maters. What’s her view?

She told me: “That’s where Cambridge University has been different and obviously our roots from Cambridge and in London, and across Europe. I think it’s going to be interesting to see the results of the U.K. government review that’s coming out in early September on this.”