Sprints Capital holds EUR 525m final close for Fund IV

Harriet Matthews
12 January 2022

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Growth-stage investor Sprints Capital has announced a final close for Sprints Capital International IV on its EUR 525m hard-cap.

The close was held in December 2021 and the fund was launched in June 2021. It surpassed its EUR 450m target.

Sprints Capital was formed in 2014 and has offices in London and Stockholm. The GP has raised two institutional funds to date in addition to Fund IV: Sprints II, which was launched in December 2016 and closed in March 2018 on EUR 154m; and Sprints III, which was launched in December 2019 and closed in June 2020 on EUR 285m.

Sprints Capital targets 3x returns and has historically performed above this, according to its managing partner, Henrik Persson.

The increased size of Sprints IV versus its predecessor will not change the GP's investment strategy, managing partner Persson told Unquote. "At the heart, our focus is investing in growth companies at Series B and later. The fund size is a natural evolution and means that we can be a more meaningful partner to the companies we invest in, leading the investment rounds with more flexibility to help companies with their funding needs. Even at a round of EUR 150m plus, we can be a significant partner. So, we are looking to keep the number of companies per fund at 8-10, but aim to invest more in each of them."

The fund has made two investments to date: it led a EUR 450m Series E funding round for Paris-headquartered refurbished electronic goods marketplace Back Market (a deal that the GP announced in conjunction with its final close announcement); and backed the latest funding round for second-hand clothes marketplace Vinted. The GP first backed Vinted in its Series D round in 2018, investing via Sprints II.

Both of these investments are in companies involved in the circular economy, which fits with the GP's sustainabilty thesis, Persson told Unquote. "Sustainability is an important focus for us, particularly within the marketplace segment where the focus often is on prolonging the lifetime of products and lowering the pressure of new production. It also flows into how we work internally: we have high quality standards on how we work with partners and companies, making sure that we are not taking short term profit but prioritising long term value and sustainability."

The GP's other investments to date include digital bank Revolut and payments software PPro. In April 2021, Sprints completed a partial exit through the IPO of Sweden-based real estate platform Hemnet. The deal realised returns of more than 10x money, according to a statement.

The GP's charitable arm, the Sprints Foundation, will receive 10% of the fund's carried interest, in line with the policy adopted for its previous vehicles.

Investors
LPs in the fund include a range of institutional investors, as well as Sprints' own team, founders, portfolio company executives and advisory network, according to a statement. The fund has a EUR 25m GP commitment.

"In the same way that we want to build concentrated company portfolios, we also want to have a concentrated and high-quality investor base with which we work across many funds," Persson told Unquote.

All of Sprints III's LPs committed to Sprints IV, Persson said.

Persson noted that the landscape for growth equity investment has changed significantly since the GP raised its first vehicle. "More than 80% of our capital comes from the US," he said of the current fund. "This includes endowments, foundations, pension funds, funds-of-funds and family offices. We have always had a lot of traction from US investors."

This traction came from the established presence of growth investing in the US, according to Persson. "Growth was not a very developed segment of the market in Europe when we started Sprints, and there were not many institutional investors focused on growth funds – they often had a pocket for venture capital, but the growth space was not as defined." However, this has changed in recent years, he said. "It has been much better defined in the US for decades and it is now becoming more established as a segment of the PE market also in Europe. We saw a lot more interest from Europe during the latest fundraise."

Investments
Sprints Capital makes growth-stage investments, focusing on technology-backed marketplaces, software-as-a-service and financial technology. Like its predecessors, it expects to have a portfolio of 8-10 companies.

Sprints IV will deploy equity tickets of between EUR 10m (typically starting at Series B) and EUR 70m, with a sweet spot of EUR 40m-60m. The GP has typically deployed its funds over two to three years and Sprints IV has a five-year investment period.

The GP expects to hold back 10-20% of the fund's capital for follow-on investment, Persson said, but this can be adjusted depending on the different stages of the companies in which it invests.

People
Sprints Capital – Henrik Persson (managing partner); Caterina Gotti (head of investor relations).