HV Capital announces eighth fund

HV Capital Fund VIII is the VC's largest fund yet and had a target of €500m, which it exceeded, reaching its hard-cap of €535m. The fund has held a first close. It has yet to hold a technical final close, but is no longer on the road.

The fund was registered in April 2020 and is domiciled in Germany. The fundraising process began towards the end of Q1 2020.

Flick Gocke Schaumburg has provided advice on the fund.

General partner Christian Saller will now head the firm's Growth Investment team, which will target new investments at later rounds than the firm's previous vehicles.

Earlier in October 2020, the firm also announced that it has hired Louise Meyer-Schönherr as an associate.

Holtzbrinck Ventures Fund VII held a final close in January 2018 on €306m.

Investors
LPs in the fund include institutional investors such as Rabobank. Fifty founders from HV's portfolio and network have also contributed €20m to the fund, the firm said in a statement.

HV's predecessor fund was backed by funds-of-funds managers including HarbourVest Partners, as well as the Abu Dhabi Investment Authority and Cambridge Associates.

Investments
HV VIII will enable HV to make initial investments in companies that are not yet in its portfolio at later-stage rounds, such as series-B or series-C, which the firm classifies as rounds of €7-25m. The vehicle will also continue to make investments from seed rounds onwards. The fund can deploy up to €50m per startup.

The predecessor fund made initial investments of €500,000-5m but could invest up to €40m in follow-on financing. It aimed to make 10-12 investments, whereas HV VIII will be able to make a larger number of deals. Robert Maier, a partner at HV, told Unquote: "The size of the investments will vary, so the range of deals could be 30-40 in total. With this fund, we have more money to invest and we have the growth pocket for the first time, so it could be closer to 40."

The fund has already begun to deploy, said Maier: "We have continued to make deals throughout the coronavirus phase and have already made the first deals from the new fund, some of which have been announced, such as Solarisbank and Dance."

HV generally invests in DACH-based companies, focusing on technology-backed companies in sectors including software, healthcare, consumer and finance. Asked about investment plans for the current fund, Maier said: "The strategy overall remains the same: we want to invest in digital companies in both B2B and B2C; we have a broad expertise in consumer, but we have made significant investments in B2B software-as-a-service companies and this is something that we want to continue, with a focus on Germany and Europe. We also have the potential to make investments beyond this selectively and we have invested in Israel and Canada before."

"One of our fields of expertise in the past was travel and tourism – we will look very closely at the sector; we are optimistic that people will travel again when they can," said Maier. HV counts businesses including Flixbus and Tourlane among its portfolio companies. However, the fund will not be limited to particular sectors. "There are still many areas where digital business models will work, so there is no specific sector that we focus on. But e-health, industrial marketplaces and technology, logistics, self-optimisation and self-improvement are areas that we are looking into."

Asked about how HV has adapted to the demands on deal-making brought about by the coronavirus pandemic, Maier said: "The dealflow remains very strong, we see a lot of deals and are still meeting teams; in contrast to before Covid-19, many meetings take place virtually and video calls are the preferred solution. We usually like to meet in person, but we have had to get accustomed to the new circumstances. But great companies are being built in the crisis and we can keep investing."

People
HV Capital – Christian Saller, Rainer Märkle (general partners); Robert Maier (partner).

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