Five Seasons closes second fund on EUR 180m

Five Seasons Ventures II held a first close in February 2021 and a final close in June 2021. The fund initially had a EUR 120m target, which was subsequently raised to EUR 150m and then EUR 180m, co-founding partner Niccolò Manzoni told Unquote.

"The fund was hugely subscribed," said Manzoni. "We could have raised EUR 250m or more, but we did not want to take it a step too far."

However, the GP took the decision not to raise a larger vehicle, said Manzoni. "Our first fund was EUR 77m and we think that EUR 180m is the right size to deliver where we think the opportunity is in Europe, which is in Series A and B. A larger fund would have meant we had to make more investments or go for growth cheques beyond Series B, where the market is maturing but not yet mature enough. As a team we just have nine people, which is an appropriate number to deliver on a fund of this size – making it bigger at this stage would be challenging."

The Paris-headquartered firm held a first close for its debut fund in February 2018 on EUR 60m, followed by a final close on EUR 77m in February 2019, which saw the GP surpass its EUR 70m target.

Much of the fundraise for Five Seasons Ventures II was virtual, Manzoni said, although an advantage of the situation was that the impact-focused firm did not need to travel and produce CO2 emissions. "In our business you never stop fundraising – we were able to keep the relationships going that we had started for the first fund and so we were not a new prospect for a lot of these investors," Manzoni said. "We also had several new LPs coming in who believe in the category and have the track record from Five Seasons Ventures I. It is never easy to fundraise, but it was definitely easier than it was for our debut."

The importance of food technology and impact investing has increased since the GP raised its debut fund, Manzoni said. "Food tech is now an asset class, too – we had to do a lot of education as to what food technology is when we raised our first fund, but not this time. And we have strong impact focus, which also appealed to LPs."

The portfolio companies of Five Seasons Ventures I have increased their revenues by 20x over the past four years to more than EUR 350m, according to a statement. "What is really exciting is that we have several Five Seasons Ventures I portfolio companies that have grown at a pace that is more akin to technology companies than traditional food businesses," Manzoni told Unquote. "Many have doubled or tripled their revenues this year. The fundamentals are strong and they have raised remarkably little for the revenues they have. They are choosing products and channels that really resonate with consumers, building economies of scale fast."

The firm announced the appointment of Micol Chiesa as its head of impact and responsible investing earlier in 2021, and became a signatory of the UN's Principles of Responsible Investment (PRI) in September. As part of its impact goals, the firm has produced a 2020 Impact Report and measures factors including CO2 emissions and reductions in food waste achieved by its portfolio companies.

Van Campen Liem provided legal advice to the VC.

Investors
The fund has a re-up rate of more than 90% from Five Seasons' debut fund. The LP base is composed of institutional investors and funds-of-funds, as well as family offices and food technology entrepreneurs, the majority of whom are based in Europe.

LPs in the firm's debut fund include BPI France, the European Investment Fund, Nestlé Pension Fund (based in Switzerland) and Italy's Fondo Italiano d'investimento, according to Unquote Data.

Investments
The fund will invest at Series A and Series B stages, targeting companies with a quantifiable environmental or social impact. "There are so few specialised food tech players that we are not competing with them for deals, although we would love to co-invest," Manzoni told Unquote. "We focus on consumer B2C food and services on a pan-European level."

The firm invests in Europe and has so far backed 14 companies in Germany, France, Italy, Portugal, Switzerland and the UK.

Five Seasons Ventures II has made four investments to date: Barkyn, Her1, The Nu Company and Viy. The vehicle expects to make 18-20 investments in total and has two further deals in the pipeline. By comparison, the VC's first fund made 10 investments.

Five Seasons' debut fund deployed equity tickets of EUR 2m-4m, but its successor can provide larger tickets in the EUR 4m-6m range, with up to EUR 10-15m in follow-on investments available. Areas of interest for the fund include healthy and sustainable confectionery companies, such as The Nu Company, as well as companies that provide sustainable packaging for restaurants and takeaways.

People
Five Seasons Ventures – Ivan Farneti, Niccolò Manzoni (founding partners).

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