Shackleton launches fifth venture secondaries fund

Alessia Argentieri
08 April 2021

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Shackleton Ventures, a direct secondaries venture investor, has launched its fifth fund, Return Fund #5, a vehicle dedicated to secondaries-led transactions.

The fund has a hard-cap of £75m and plans to hold a £25m first close in the coming weeks, the VC told Unquote. It is managed by Shackleton's fund management subsidiary Shackleton Finance and is advised by joint venture partner Ruffena Capital.

The vehicle targets a 2.5x return, consistent with the performance achieved by Shackleton's four existing funds.

Hugh Stewart, managing partner of Shackleton Ventures, told Unquote: "We expect to hold a smooth fundraising process, attracting previous and new investors, thanks to our track record… and our expertise in the venture secondaries sector."

In addition, the firm is managing the portfolio of its fourth vehicle, Shackleton Secondaries Victoria, which was launched in 2016 and raised around €20m. The fund is dedicated to the German fintech sector. Its portfolio includes FinLeap, a fintech ecosystem based in Berlin; smart insurer Clark; digital risk specialist Element; and B2B2C bank Solaris.

Shackleton has also recently announced its exit from OmPrompt, an order management platform for the consumer and healthcare sectors, which was sold to Eurazeo-backed Elemica International.

The business was a portfolio company of Shackleton's second fund, Shackleton Secondaries II, launched in 2007. The vehicle has achieved a 15% net IRR to date and a 2.9x cash return multiple for its investors.

In total, including OmPrompt, Shackleton has completed 24 profitable exits since the firm's inception in 2006.

Investors
Return Fund #5 plans to build an LP base composed of corporate investors, sophisticated individual investors and institutional LPs.

It expects to attract private individuals and family offices initially, and subsequently expand its LP base with the addition of several institutional investors. LPs are expected to be primarily UK-based, with a minority of European and possibly US investors.

Investments
The fund intends to combine secondary purchases from existing investors with the deployment of fresh capital directly injected in high-growth potential companies.

Deals will comprise both individual companies and portfolios of investments. The fund will primarily target established and scale-up companies with proven business models.

Stewart told Unquote: "The majority of our investments will be in secondaries transactions, but we will also deploy primary capital, either at the same time as the secondaries investments or after, as a follow-on, or sometimes even ahead of our secondaries transactions. That primary money is used to grow the business and fuel its expansion."

He added: "We usually buy an investment in a company or a portfolio of investments from an investor that wants liquidity. It could be a VC fund at the end of its life, a bank, a corporate investor or a private individual. While providing liquidity for professional investors, we also support first class businesses and entrepreneurs in their journey."

The fund invests tickets of £1-5m, which are deployed in different stages across the entire life of an investment.

Around three quarters of the capital will be deployed in the UK and Ireland, while the remainder will be primarily invested across Scandinavia, Germany and the Netherlands.

The vehicle focuses on three B2B technology sectors: advanced engineering and cleantech; healthcare technology; and digital transformation, including advertising technology, fintech and supply chain technology.

Stewart said: "Our target companies are a mix between established businesses that have a few million in revenues, are cash positive and often generate consistent profit, and early-stage companies that have just started to generate initial revenues and developed a proven product or service offering that needs support for scaling up."

Return Fund #5 has already completed its first deal, a £1.5m investment in sales transformation specialist Mentor Group.

People
Shackleton Ventures – Hugh Stewart (managing partner).

Click here to read a recent Unquote analysis on the improved prospects for venture secondaries