Hoxton closes second fund on almost $100m

The fund was registered in January 2018 and held a first close on $74m in February 2020 against its target of $100m. The fund had a hard-cap of $120m and is domiciled in the UK as a UK LP.

Said Hussein Kanji, a partner with the firm, said: "We had a false start with this fundraise due to the triggering of Article 50. We had a term sheet with European Investment Fund, which they backed out of, and it took several months for British Patient Capital to fill that gap. All in all, it cost about a year."

The fund has a 30% carry rate with a 2.5% management fee and no hurdle, Kanji told Unquote. He said the fundraise was completed before the coronavirus crisis hit, while the firm had to grapple with the administrative process, such as know-your-customer (KYC) processes and signings. "It all went off without a hitch online though," he said.

"We've been very lucky in that our Hoxton Ventures I portfolio companies have been very healthy and our companies in the second fund are very young and still have lots of cash," Kanji said. "This meant we've had a lot of mental bandwidth to invest while other firms have been dealing with their portfolio, so we're currently actively investing."

Morrison & Forrester provided legal advice.

Investors
Hoxton Ventures II saw increased commitments from investors in Hoxton's first fund, alongside commitments from new UK, Swiss and US institutional investors. New limited partners include British Patient Capital, the largest investor in UK venture capital.

Other investors include British Business Investments, Cisco Investments, LGT Capital Partners and Nuclear Liabilities Fund, according to Unquote Data.

Most existing investors re-upped, according to Kanji, with about 80-85% of capital coming from institutional investors, of which there are eight.

The fund had a minimum commitment size of $5m.

Investments
The fund will invest between $250,000-5m in European technology companies with an expected holding period of 10 years.

Hoxton focuses on leveraging its partners' connections to the US. The fund expects most of its investments will target the US market, either by opening offices in the US or building a sales presence there.

The new fund began investing in early 2019 and has made 20 investments across a range of sectors, including seed investments in FabricNano, an enzyme business; Fy!, a homewares marketplace; KBox Global, a kitchen business; Kheiron Medical, an artificial intelligence radiology startup; and Preply, an online education company. Hoxton Ventures II is around 20% deployed, according to Kanji.

Kanji told Unquote that, while the firm is currently investing, there are no acquisitions expected imminently.

People
Hoxton Ventures – Hussein Kanji (partner).

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