Isomer taps existing LPs for new co-investment fund

The fund aims to raise between €50-100m and will seek direct investment opportunities in "any businesses enabled by technology", according to its founder and managing partner, Joe Schorge. This includes software, services, e-commerce, cybersecurity, financial services, healthcare and blockchain technology, among others.

It can make investments of €1-5m per company across funding rounds, and targets companies that can demonstrate good "product-marketing fit", where the company's product has traction with a good set of customers and is ideally revenue-generating, according to Schorge.

The fund will have a target return of 4-5x money multiples for its portfolio investments, so timing its investment early enough to help it achieve its target is important, the founder added.

Recent co-investments in this category include UK-based SuperAwesome, a technology firm that safeguards young people's online engagement; and Bionic Systems, a German firm that develops and produces the Cray X smart industrial exoskeleton.

Isomer's co-investment strategy will be complementary to its existing fund-of-funds investment model, where its existing underlying venture capital managers are helping Isomer generate its proprietary dealflow. It will pay fees on co-investments on a case-by-case basis, but is only expecting to invest alongside managers from its fund-of-funds portfolio.

Through the new vehicle, some of its existing LPs with limited experience investing in the sector may choose to gain more direct exposures to the most promising startups by investing alongside Isomer's portfolio and in future deals, he said.

The move will expand on its existing fund-of-funds, which has the capacity to do some co-investment but is currently capped at 20% of the total fund. Its current fund-of-funds strategy has 18 early-stage venture capital funds based in the UK, France, Germany, Spain and Nordic countries. It expects to finish deploying capital in the coming three to six months with about five more fund investments.

Isomer's existing LPs will be given first refusal on the co-investment fund and the fund will then, depending on initial take up, consider broadening its fundraising effort to include potential outside investors.

Existing LPs are institutional in nature, for example the European Commission's VentureEU programme, corporations, foundations, listed investment holdings and family offices from Europe, Asia and the US.

As at last quarterly report, Isomer's fund-of-funds had exposure to 409 companies through its VC fund investments.

Its existing fund-of-funds investments include Hoxton Ventures, ByFounders, White Star Capital II, Karma Ventures I and Connect Ventures II.

The terms of its upcoming co-investment fund are set at a standard 10-year life, with a three-year investment period. The fees structure will be "inexpensive" and will be set at "below market" price, although its levels are not disclosed at this time.

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• Topics
• Funds
• Fund-of-funds
• Technology
• UK / Ireland
• Isomer Capital
• Venture
• United Kingdom