IQ Capital closes two funds on $300m

The Growth Opportunities Fund was launched on 1 June 2018 with a target of $125m. Although the firm has held a first close for the fund on $125m, IQ Capital partner Max Bautin told Unquote that the firm intends to keep it open for a final close.

IQ Capital III had a target of $130m with a hard-cap of $150m, but, as the fund was oversubscribed, the firm decided to take more capital to reach $175m, with LP consent. There are currently 12 investments in the fund and it is 8.5% deployed.

Both funds are domiciled in the UK.

IQ Capital II raised £25m from the British Business Bank and £17m from private investors to close on £42m in 2014. The fund sought to invest in the technology sector with an investment limit of £5m and is now invested in 18 companies. It is 80% deployed and is no longer making new investments.

Bautin told Unquote that the firm is currently exploring five investments.

Investors
The fund has around 60 investors, 80% of which are UK-based, with the rest from the US and Europe. Bautin told Unquote that while there was significant interest from Asian investors, the firm did not feel they were the right fit. Of Fund II's LPs, 90% reinvested in Fund III; its LPs include institutions and family offices. Of the total $300m in raised capital, $100m was contributed by technology entrepreneurs.

National Grid Partners is a new investor for the firm and the British Business Bank's Patient Capital Fund is an existing investor.

Bautin told Unquote that the bulk of the LPs for both the Growth Opportunities Fund and IQ Capital III are the same.

Investments
The firm is UK focused in its investments, but has the scope to invest in European entities where necessary.

Its equity tickets start at $500,000-1.5m for seed investments and $3-7m for series-A investments. The firm generally continues to invest pro-rata at stages beyond that till the company's sale. In total, the firm can deploy up to $15m via its venture funds and $30m via its growth fund for a total of up to $45m in equity per company.

IQ Capital Fund III, like its predecessor, will target early-stage startups focused on artificial intelligence, machine learning and "deep tech", meaning the companies are based on substantial scientific advances and high-tech engineering innovation. It focuses on seed and series-A investments with an expected holding period of between five and eight years.

The Growth Opportunities Fund will provide later-stage capital to existing IQ Capital portfolio companies. The fund makes investments of $20-30m and is expected to have six or seven portfolio companies with an expected holding period of between two to four years. It made its first investment in a $40m series-B funding round for data privacy engineering company Privitar in June 2019, which was an IQ Capital Fund II portfolio company.

People
IQ Capital – Max Bautin (co-founder, partner).
National Grid Partners – Lisa Lambert (founder, president).

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