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Balderton, original backer of Revolut, launches new $400m fund for startups

·Finance and news reporter
BERLIN, GERMANY - DECEMBER 05:  Balderton Capital General Partner Suranga Chandratillake talks at TechCrunch Disrupt Berlin 2017 at Arena Berlin on December 5, 2017 in Berlin, Germany.  (Photo by Noam Galai/Getty Images for TechCrunch )
Balderton Capital general partner Suranga Chandratillake speaking in Berlin in 2017. Photo: Noam Galai/Getty Images for TechCrunch

Balderton Capital, the venture capital firm that was one of the earliest investors in fintech giant Revolut, on Monday launched a new $400m (£311m) fund for early stage startups in Europe.

The fund will focus on the series A stage, when startups typically raise their first major round of outside investment.

Balderton, which is based in London, said it would invest in “leading-edge technologies” and “strong brands with demonstrable momentum.”

The new fund is Balderton’s seventh early stage fund since it was formed in 2000. The firm was also an early investor in Betfair, Citymapper, Nutmeg, and Swedish e-scooter startup Voi, and has invested in 15 countries across Europe.

“Series A is a critical point in a startup’s journey,” said Bernard Liautaud, the managing partner of Balderton, on Monday.

He noted that his firm was “dedicated” to helping startup founders tackle the decisions they face as they begin growing their companies.

“We believe Europe has the potential to build the next generation of technology giants, and we are focused on helping brilliant founders fulfil that ambition.”

According to data compiled by Dealroom, Balderton was the most-active series A investor in Europe between 2014 and 2018.

The number of series A rounds in Europe each year has quadrupled since 2012, while 2018 was a record year for venture capital funding.

Many VC firms focus on more than one stage, but Balderton believes the close focus on the Series A stage helps it avoid issues.

“There aren't the sort of conflicts that can arise if you do multi-stage investing,” Suranga Chandratillake, a partner at Balderton Capital, told Yahoo Finance UK.

“You know, if you do a series A in a firm, and you're known for doing series B rounds, and you don't do the B, there's often a question mark around why that happened and if there is something wrong with the company.”

Since the start of 2018, companies that Balderton have invested in have attracted more than $2bn in further investment, the firm said on Monday.

Those companies now employ more than 18,000 people in over 50 countries.

Balderton was originally founded as the European outpost of famed US venture capital firm Benchmark Capital.

But it gained independence in 2007, when it took on the Balderton moniker. Benchmark, meanwhile, has begun investing in Europe, where a significant proportion of its investments are now made.

The history between the two firms is “less and less relevant”, said Chandratillake.

“In both cases, I think, the partnerships have completely refreshed since then. But we've worked together a lot. We have had a number of co-investments with them,” he said.

He noted that Balderton often recommends Benchmark to portfolio companies who are seeking follow-on funding beyond the Series A stage.

Balderton said that its new $400m fund would be managed by an investment team of 15 people across Europe. It now also has permanent staff in Berlin and Paris.

As for the LPs — or limited partners, who put up the $400m in funding — around 75% of them previously invested in Balderton funds, Chandratillake said.

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