Endeit Capital holds final close for third fund on €250m

Loyens & Loeff provided legal advice, but Endeit did not use a placement agent.

Endeit Capital III will continue to focus on technology scale-ups, focusing on later-stage European internet startups that the firm views as having potential to accelerate digital transformation and digital maturity in Europe.

The final close announcement comes shortly after the firm announced that co-founder Joop van den Ende has sold his 50% stake in the firm to partners Hubert Deitmers and Martijn Hamann, as reported.

"We started our firm in 2006 and we were one of the first growth investors in Europe," partner Martijn Hamann told Unquote. "Our starting point was the exit from Endemol. We worked with the founders for many years, brought the company to the stock market, made an exit to Telefonica and brought the company back to the stock market again. We did a lot of M&A investments at Endemol, completing 60-80 acquisitions and becoming a global leader in the space. And we try to do the same thing with the European entrepreneurs we work with, positioning their companies on a global scale and breaking out of the comfort zone of their domestic market."

Philipp Schröder, a partner based in Endeit's Hamburg office, explained how Endeit's strategy fits with the current European venture market. "Until around 2014, we did not see too many big exits in Europe. Many businesses were sold in the €75-125m range, aside from a few unicorns, but the European ecosystem lacked the confidence to build global leaders. We want to make sure European businesses don't just sell once they dominate one specific market, but become global leaders. There has been a change in the ecosystem, with more capital available, and we want to push this development."

Endeit Capital II held a final close in January 2016 on €125m. The fund made its last investment earlier in April 2021, participating in an $80m round for Netherlands-based app developer Bux.

"We see a lack of growth capital between series-A and series-D/-E rounds, where the large PE funds can come in," said Hamann. "We have local operations in Hamburg and the Netherlands, where we can work on the ground with early-stage investors to bring companies to a series-B round. This is an interesting spot for us not only in terms of value, but also in internationalisation, scaling and buy-and-build opportunities."

Investors
"We informed our existing LP base of entrepreneurs, family offices and institutional investors that we were planning to raise another fund and almost all of them re-upped – the majority increased their commitments," said Hamann. "We raised the fund over the last two quarters, which is when we also got more inbound new investors."

In addition to the fund's increased size, the LP base has also changed, Hamann added. "The quality of the LP base has also improved from Fund II to Fund III. The overall majority is from existing investors, who are entrepreneurs and institutional investors, and around one third is from new investors, including many ex-founders from our exited portfolio firms."

The fund is backed by LPs including family offices and institutional investors, as well as Endeit's partners themselves. Schröder told Unquote that the firm's relationships with the entrepreneurs in whose companies it invests has also encouraged them to commit to Endeit's funds: "We have very clear values based on respect and appreciation in our long-term investments. These entrepreneurs have invested in our fund, which shows how we deal with our portfolio companies and the amount of attention we give them."

Investments
Endeit has traditionally invested around 45% of its capital in each of the DACH and Benelux regions, and the third fund is expected to follow the same strategy, with around 10% investing for potential investments in the UK and the Nordic region. The fund will have a three to five year investment period and will make around three to five deals per year, aiming to make 16-20 in total.

Due to its increased size, the fund can invest larger tickets than its predecessor and will €8-12m per deal, with up to €20m available per company.

The fund will focus on companies developing technology relating to machine learning, AI and quantum computing. Endeit's previous investments include 3D printing platform 3D Hubs, which was sold to trade player Proto Labs for around $330m in January 2021.

"It's in our DNA to help entrepreneurs and companies to flourish, but this takes time and massive dedication from our team," said Hamann. "We see each investment as a stepping stone for additional investments with that company, via a buy-and-build strategy: we make add-ons in partnership with the management team, looking for partnerships and joint ventures. We grow into having an active board role with founders, meaning that you can work together on growth and an exit."

People
Endeit Capital – Philipp Schröder (partner); Martijn Hamann (co-owner, partner).

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