A London startup fund just broke a big taboo
They might make some noise when one startup in their portfolio has a successful exit - be it an IPO or an acquisition - but updates on the performance of an entire fund, which is used to back a variety of startups, is something of a taboo.
Going against the grain, London-based startup investor Seedcamp gave a rare insight into how well it's doing as it looks to increase transparency in a secretive industry.
In the update, the company, which backs seed-stage startup founders with up to €200,000 (£180,000), claimed that it has made more than $250 million (£201 million) in the first nine months of 2016 thanks to four successful exits and a number of fundraises. One of this year's standout exits was the multi-million dollar sale of Stupeflix, the video editing software startup to GoPro, the Nasdaq-listed action camera firm. The other exits in 2016 are:
- Adtech company Brainient (backed in 2009), acquired by French rival Teads
- SME bank Holvi (backed in 2011) sold to banking giant BBVA
- Farmeron (backed in 2011) sale to Virtus Nutrition
Seedcamp gave a breakdown of what happened to each of the startups that it backed with its €2.5 million (£2.25 million) fund raised in 2007, the same year it was founded. Seedcamp's "Fund 1" was used to back 22 companies, which have returned €4 million (£3.6 million), or 1.5 times the initial investment. From the original portfolio there have now been 10 "successful" exits and eight businesses continue to grow profitably, Seedcamp says. But not all of the startups that Seecamp backed went on to great things; four of them no longer exist, for example.
Sahoni added that it usually takes much longer for an investment fund to get its money back on the investments it makes. "We have already returned the fund and done it fast, with more upside ahead of us," she said.
"Note that accelerator funds tend to be smaller, which is what our Fund 1 was," Sahoni continued. "And even that capital isn't always returned. It's important to see if that money is actually earning upside. Our second fund was €5.2 million (£4.7 million) and our third fund is €20 million (£18 million). So you'd want to see similar returns to continue with growing fund sizes."
Seedcamp has backed over 230 companies across a range of sectors since it was founded almost a decade ago by Sahoni and serial entrepreneur turned investor Saul Klein. Those companies have gone on to raise $500 million (£402 million) between them.
Recent Seedcamp investments include the likes of London-based money transfer app Revolut, which it backed in a $10 million (£8 million) round in 2015, and billion-dollar "unicorn" TransferWise, which it backed in a $26 million (£21 million) series D round.
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