DN Capital holds final close for fifth fund on €300m

GVC V will continue the strategy of its predecessor vehicles, backing early-stage growth companies in Europe, the UK and the US.

Unquote reported that the GP had surpassed the €200m mark for its fundraising in June 2021.

Triago, Rising Impact and Debevoise & Plimpton advised on the fundraise.

Asked about the timeline of the fundraising process, Nenad Marovac, managing partner and co-founder at DN Capital, told Unquote: "We launched in February 2020 – then the whole world went into lockdown about two weeks after the SuperReturn. But we had a June first close, which allowed us to do our first investment. That was GoStudent, and the company has grown 70x in one year: we invested at a €20m pre-money valuation, and it is now valued at €1.4bn."

Due to coronavirus lockdowns and travel restrictions, much of the fundraise was done remotely, Marovac said. "We did meet people in person in Germany during the fundraise and we did two one-week roadshows in person, but more than 50% of new LPs we met with virtually."

Marovac added that virtual meetings have not hindered the GP's fundraising or deal-making. "Meeting virtually saves you from travelling to 20 cities in five days, so it is efficient, and in some cases, it does make a lot of sense to do a first meeting virtually – not just in fundraising, but also when meeting new prospective portfolio companies. GoStudent is one of the most successful investments we have ever made, but we only met their CEO [Felix Ohswald] in person two weeks ago."

The vehicle is significantly larger than its predecessor; GVC IV closed on €200m in 2017. Both GVC IV and its €144m predecessor are achieving top-quartile performance based on Cambridge Associates' fund performance criteria, Marovac told Unquote.

Founded in 2000, DN Capital has offices in London and Berlin, with an additional Silicon Valley hub.

Investors
GVC V was significantly oversubscribed, the GP said in a statement. One third of the fund's LPs are from the US, with two thirds from Europe, as previously reported by Unquote. The fund has more institutional investors, including pension funds, than its predecessor vehicle.

The fund has LPs from Europe (including Switzerland) and the US, including Connection Capital, as previously reported.

Investments
In spite of its larger fund volume, GVC V will follow the same strategy as its predecessor vehicles, Marovac told Unquote. "We will not change our strategy, but the market has moved – series-A used to be €5m three or four years ago but it's now around €10m. So we have a perfectly sized fund for series-A investments in Europe."

DN Capital typically makes equity investments of €2-10m, investing at seed to series-B stage. The fund expects to make 20-25 investments in total. It intends to invest 20-25% of the fund's capital in the US, with around 75% reserved for Europe (including the UK). The firm focuses on the software, fintech, consumer marketplace and consumer internet sectors, with an emphasis on companies facilitating digital transformation.

Deployment of the fund is already well underway, Marovac added. "We have committed about a third of the fund across 10 or 11 investments and the fund has already experienced a significant valuation uplift."

DN Capital's previous investments include Auto1 and Mister Spex, both of which completed IPOs in 2021. Online used car marketplace Auto1 was valued at €7.9bn at the time of listing and was valued at more than €8.2bn at the time of publication, compared with a €17m pre-money valuation at the time of DN Capital's investment in its first funding round in 2013, as reported. Digital optician Mister Spex had a market cap of around €829m when it listed in July 2021.

Further recent investments from DN Capital include Spain-based flexible staffing platform Jobandtalent; the GP first backed the company in 2018 and it was valued at more than €1bn at the time of its latest €205m funding round in June 2021, which saw participation from VCs including Softbank.

People
DN Capital – Nenad Marovac, Steve Schlenker (co-founders, managing partners).

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