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Connect Ventures closes $80m seed fund

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Connect Ventures, a London-based venture capital house focused on seed-stage technology investments, has closed its third fund on $80m.

The vehicle was launched in 2018 and held a first close in January 2019 on around $40m. It is larger than its predecessor, which closed on $62m in 2016.

“We raised most of the capital by the beginning of the year, prior to the coronavirus outbreak,” Sitar Teli, co-founder and managing partner at Connect Ventures, told Unquote. “We received additional commitments of around £5-10m in March and were able to successfully close the fund.”

She added: “Despite our success, we can't deny that it has been a tough environment for fundraising. However, because we have built very strong relationships with our LPs and work very closely and collaboratively with them, we didn’t have any of them pulling out of commitments or reducing their tickets as it happened to other VC funds. Furthermore, we managed to raise additional capital during the months of the crisis, which reflects the fact that we are a third-time fund with a long and solid track record.”

Connect was founded in 2012 and has invested in 50 product-led software startups since inception, including Citymapper, Curve, Fiit, Kheiron, Soldo, Truelayer and Typeform.

Investors
The fund received commitments from a combination of existing and new LPs, including Top Tier Capital Partners, Isomer Capital, UK institutional investor British Patient Capital, Italian holding company De Agostini, Big Society Capital, Draper Esprit and Korelya Capital, among others.

Investments
The fund has a pan-European remit and deploys capital in companies operating across all B2B and consumer software segments, including SaaS, fintech and digital health.

The vehicle leads seed rounds and provides further support to companies’ founders on their seed-to-series-A journey with capital, network and expertise. It deploys equity tickets in the $1-1.5m range in rounds of approximately $1-2m total. The fund plans to make around 27 deals.

“We’ve created a low-volume, high-conviction, high-support fund to back product-centric startups,” said Teli. “That’s why we will be targeting the same curated number of seed investments with this fund, using the larger size to provide additional capital and support to our portfolio companies.”

The fund will invest at least 50% of its capital in companies based or incorporated in the UK or generating most of their revenues in the UK. The remainder will be deployed in the rest of Europe, with a special focus on France.

The fund has already made nine investments, including rounds for childcare and babysitting platform Parentalist, money management app Emma, and talent enablement platform Oyster.

Teli said: “The coronavirus emergency has not slowed us down. We haven’t changed or altered our investment strategy at all. Our pipeline remains rich and we have already closed three investments since the crisis started.”

People
Connect Ventures - Sitar Teli (managing partner); Pietro Bezza, Rory Stirling (partners).

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