Digital Horizon set for USD 200m Fund II first close in Q2 2022

The fintech- and corporate software-focused investor started marketing the fund in December 2021 and has soft commitments of USD 100m. Domiciled in the Cayman Islands, Digital Horizon II will have a lifespan of seven years with two one-year extensions. Dentons is acting as legal adviser on the process.

Digital Horizon has USD 250m in assets under management across its vehicles, which include its growth fund and a “venture builder”, which builds and grows technology start-ups. Its previous VC fund has 1.95 TVPI after two years of operation, according to Tropko.

The minimum subscription for Fund II is USD 1m and the GP contribution is around 5%, which Tropko said the firm is considering increasing. The management fee will be 2%, with 20% carry and no hurdle.

“We can continue fundraising for 36 months after first closing and have no restrictions regarding the next fund,” Tropko said. It plans to use 50% of the fund for new investments and 50% for follow-ons.

There are more than 20 LPs involved so far, the majority of which are family offices and high-net-worth individuals, mostly based in Europe, Israel and Russia, according to Tropko. “We are also in discussion with several institutional investors,” he added.

Some 80-90% of LPs in Fund I gave soft commitments to invest in the new vehicle, Tropko noted.

Investment strategy
Digital Horizon is a multistage investor, Tropko said, adding that it favours start-ups led by passionate immigrant entrepreneurs with a clear vision and strategy, Tropko said.

Half of the new fund will be deployed in Series A and B rounds, and the other half in Series C and beyond.

In terms of sectors, it will focus on fintech, including insurance technology and decentralized finance, and on B2B software (SaaS). The fund will be distributed equally across both segments, according to Tropko. Its geographical focus is the US and Europe (including the UK), as well as Israel and Southeast Asia, he said.

Horizon deploys tickets of USD 500,000-40m, across all vehicles and does not have a target stake. The firm can acquire equity stakes ranging from 0.001% in pre-IPO companies to 20% in early-stage businesses.

It plans to conduct seven to 10 investments and follow-ons per year and up to 35 in total. The firm will invest alongside other VCs around the globe with a network and previous experience, Tropko noted.

Digital Horizon has not yet made any investment yet from the second fund and is still investing from its first fund.
Horizon annually reviews around 1,500 startups and around 40 deals on the investment committee, Tropko added.

Team struture
Digital Horizon has six partners in the fund team, three of which are based in the UK: founder Alan Vaksman focuses on fundraising and global dealflow and fintech; Elena Haykin is responsible for legal matters fundraising; and Rohit Mathur focuses on the UK and Southeast Asia.

The firm’s other three partners are based in Russia: Vlad Tropko, who focuses on European deal flow and fundraising; Denis Ivanov, who is CIO and is responsible for investment strategy and dealflow to its Growth Stage business; and Aleksander Kurapov, who focuses on Growth Stage fundraising.

The firm also has an investment director, an associate, two analysts, two legal specialists, and an intern, as well as more than 50 team members in its “venture builder” division, Tropko said.

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