Isai reaches first close on €90m for Venture III fund

This is the sixth fund managed by Isai, which launched its first vehicle 10 years ago. The firm now has around €500m under management.

Its immediate predecessor, Isai Venture II, collected €75m in June 2015, above its €70m hard-cap. Isai managing partner Jean-David Chamboredon told Unquote at the time that commitments were rejected from €75m onwards but investor appetite reached €100m.

The 2015 fund was double the size of both its predecessor and Isai's debut fund, Isai Développement, which closed on €35m in October 2010.

In 2013, Isai also held a final close on €50m for its second fund, Isai Expansion, which targeted larger tickets compared with its venture counterpart. The vehicle's successor, Isai Expansion II, closed on its hard-cap of €150m in July 2018.

In June last year, Isai teamed up with consultancy Capgemini to launch Isai Cap Venture. The fund has a €90m target and will aim to take minority stakes in 15-20 technology startups that develop software products for B2B services, providing equity tickets in the €1-5m range.

Click here for a full overview of Isai's fundraising and deal activity

Investors
Isai Venture II prioritised individual investors: 65% of all commitments came from around 100 entrepreneurs, while institutional backers and corporates provided the remaining 35%.

Isai stated that it was able to rely on its historical investor base for the first closing of Venture III, while also welcoming a handful of newcomers. Institutional investors that have backed the latest fund at this stage include BPI France, Arkéa, Quadrille and Idinvest.

Isai co-founder and French entrepreneur Pierre Kosciusko-Morizet (who notably founded marketplace PriceMinister) is the largest individual investor in the fund.

Investments
Like its predecessor, Venture III will focus on startups in the digital space, including software-as-as-service developers, and marketplace and AI businesses. It will invest as the lead in around 20 businesses with equity tickets ranging from €1-3m, with the ability to return for follow-up rounds.

A separate pocket of €150,000 will be dedicated to seed funding and will be deployed along the lines of a "super angel", according to the firm.

By comparison, the Expansion II fund deploys tickets of €5-30m.

The VC is also looking to bolster its cross-Atlantic investment capacity with this new fund – it will also back US startups founded by French citizens, in addition to supporting French companies in their expansion into the US.

Isai stated that capital efficiency would be a key criteria in selecting and backing potential investments, with co-founder and general partner Christophe Raynaud saying: "You don't necessarily need a lot of money to develop a product, test a market and validate a business model. We strongly believe that creativity is greater under constraint."

People
Isai – Jean-David Chamboredon (managing partner), Christophe Raynaud, Thierry Vandewalle (general partners).

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