Dawn closes fourth fund on $400m hard-cap

The fund was launched in February 2020 with a hard-cap of $400m. Haakon Overli, a general partner and co-founder at Dawn, told Unquote the fund was oversubscribed.

"We were very confident we were going to hit our hard-cap," said Overli. "We launched at the end of February and, amazingly, Covid-19 did not change our timeline, it just changed the nature of the fundraise."

Overli said of the impact of the coronavirus crisis on LPs: "In general, we saw that experienced venture LPs re-upped heavily. They may have seen this type of change previously and upheaval is good for technology. With the huge acceleration in digitalisation, once they had done their due diligence, they realised that we as a firm are quite well set up for this."

The fund's predecessor, Dawn Capital III, closed on £165m in April 2018 and has now made its final initial investment – in automation software provider Bryter – though some capital remains for follow-on rounds.

Dawn Capital Opportunities Fund, a vehicle focused on series-C rounds, is now fully deployed across five investments.

The firm is currently tracking in the top 5% of global VC performance regarding distributions to paid-in, according to Cambridge Associates' quarterly review.

Macfarlanes provided legal advice.

Investors
The fund has 50 LPs, of which 14 were new LPs to the firm. All the firm's existing LPs invested in the fund, according to Overli.

LPs in the fund include Axa Investment Managers, British Business Investments, Cathay Life Insurance, the European Investment Fund, the European Investment Bank, Legal & General Capital and Middleton Enterprises.

"We took great care to ensure the correct concentration of LPs and to make sure there was no one LP that took too much of the fund," said Overli. The fund's minimum commitment size was $5-10m, dependant on the type of investor involved. Only one investor holds a commitment larger than 10% of the fund.

LPs comprise institutional investors, including pension funds, endowment funds and funds-of-funds, as well as family offices and high-net-worth individuals, including some of the firm's founders. Overli said no single type of LP holds more than 20% of the fund.

The geographic composition of Dawn IV's investors is approximately one third from the US, one third from continental Europe, one quarter from the UK and the remainder split between Asia and the Middle East.

The GP commitment is 3-4% of the fund.

Investments
The fund will target initial investments of $5-20m aiming to make 20 investments in total over a three-and-a-half-year investment period. Around 30% of the fund will be dedicated to follow-on rounds for its highest-performing companies.

Dawn IV will pursue the same strategy as its predecessor funds, investing in series-A and -B rounds for Europe-based B2B software startups, which Overli expects to hold for around seven years.

The fund focuses on four sectors: data and analytics; security technology; financial technology; and a sector Overli called "the future of work". This sector includes companies focused on remote working software.

Dawn has already drawn equity from this fund for one investment, which has not yet been announced. Overli expects the fund to make several more investments in 2020.

People
Dawn Capital – Haakon Overli, Norman Fiore (general partners).

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