Cherry holds first close for EUR 300m growth fund

Targeting EUR 300m, Cherry will reserve 60% of the fund's capital for follow-on investments to back companies across later stages. The new fund remains committed to seed investments, and will explore new sectors, while sticking to core sectors like food technology, software, fintech, commerce, health and climate technology.

According to Cherry's website, it typically invests EUR 300,000-3m and describes itself as long-term financial partners, reserving the majority of their fund for follow-on fundraising. The new fund will back founders based in Europe and technology sectors at pre-seed and seed stages as their first institutional investor. It will harness Cherry's existing expertise and experience by featuring a dedicated strategy with crypto and web3, which is used in existing businesses like emission reduction company Radicle, among others.

Speaking to Unquote, partner Filip Dames said: "One of our initiatives is sustainable and impact investing, which is highlighted by some of our recent investments. A number of sectors remain important to us. We are active in fintech, food, commerce, logistics and infrastructure. I spend most of my time invested in fintech and in digital health, an industry that has changed due to covid, and a lot of innovation has accelerated in that space, including patient care and mental health."

Dames told Unquote that the fund has held its first close. "The fund was fully committed in eight weeks making it our fastest fundraise ever. It closed in one go. The final close will be held in a few weeks and we are no longer fundraising. We close at our hard-cap and were roughly 3x oversubscribed on the fund. We didn't want to increase the fund size above the hard-cap as we want to stay focused on our current strategy."

Dames said the fund does not have fixed targets, as the GP wants to have flexibility, but it will continue to focus on some core areas. "We have double-digit AUM fund volume that will go into fintech, crypto, and sustainable companies." 

The fund will have a 10-year life span and could be extended, according to Dames. He added that the founders made a minimum subscription of around EUR 200,000, and institutional investors contributed more than EUR 3m. The fund writes cheques of EUR 1m-5m and the vast majority of the fund will be spent in Europe, with some exceptions, such as if the European founding team had set up in a different country. However, investments will always have a European angle, Dames said.

The VC's predecessor vehicle, Cherry Ventures III, held a final close on its hard-cap of EUR 175m in June 2019. The fund invests in a company's first round of institutional fundraising, including pre-seed and Series A, writing cheques ranging in size between EUR 300,000-5m. It focuses on backing startups with B2C and B2B business models. The fund usually participates in rounds involving a DACH-based company that generates less than EUR 10m and writes around 10 equity cheques a year. The fund received investments from a host of LPs including pension funds, funds-of-funds, and universities. LPs included mainly existing investors such as LGT, ProSiebenSat.1, European Investment Fund and family office Haniel. Almost half of its LP base is European, while the other half are US-based, according to Unquote Data.

Cherry has backed five unicorns in 2021 and has a total of nine unicorns, including Flink, a food delivery app that was valued at USD 2.85bn following a USD 750m Series B round in December 2021; and SellerX, a company that buys and grows Amazon businesses and has raised USD 750m to date. Its portfolio raised more than EUR 5bn in follow-on financing and the post-money valuation of Cherry's portfolio across its three former funds stands at EUR 23bn, according to a press release.

Cherry backed Infarm, a vertical farming business, in a EUR 88m Series B funding round in June 2019; and QOA, a Germany-based food-tech startup in a EUR 6m seed round in October 2021.

Cherry was founded in 2013 by Christian Meermann, Daniel Glasner and Filip Felician Dames. The firm's team of entrepreneurs have experience in supporting fast-scaling companies like Zalando from startup to IPO. The team itself is made up of startup founders and specialists. Sophia Bendz joined the VC as a partner in 2020 and was formerly the global marketing director at Spotify. The VC has a team of 24 based in Stockholm, London and Berlin, with diverse backgrounds in law, finance, computer science and many more disciplines.

Investors
Cherry stated its LPs consist of family offices, pensions funds, endowments, foundations, and sovereign wealth funds, alongside an entrepreneurial LP base. Half of the investors are based in Europe and the other half are US-based. The VC did not want any of the investor to invest more than 10%, according to Dames. The fund has no cornerstone investor and Dames said the institutional LPs are all of a fairly similar size. 

Investments
The fund will back European businesses focused on technology and optimisation, according to a press release.

Dames said: "The next investments we make will be from the new fund. We are looking to invest in 12-15 targets per year." He added that the GP is willing to co-invest across all stages, but will lead some rounds independently.

People
Cherry Ventures – Filip Dames, Chrsitian Meermann, Sophia Bendz;Thomas Lueke (partners); Alexander Langholz-Baikousis (CFO).

Advisers
Equity – Ypog (legal).

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