Blossom holds USD 432m final close for third fund

Harriet Matthews
18 January 2022

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Blossom Capital has held a final close on USD 432m for Blossom Capital Fund III, which will continue the firm's focus on Series A venture investing.

The fund was registered with the US SEC in August 2021 with a USD 425m target, according to Unquote Data. The fund has a 10-year investment life.

Proskauer provided legal advice.

Blossom's predecessor fund held a final close in January 2020 on its USD 185m hard-cap.

Blossom Capital managing partner Alex Lim, who joined the firm in 2021, told Unquote that the fund's increased size reflects the changing and growing market. "We targeted a meaningfully larger fund size this time, mainly because we see the market opportunity as much larger. Round sizes have grown in Europe, especially at Series A, and the number of companies getting funded at seed stage is growing, too, which is a pipeline for us. We want the capital to help grow and support these companies. Our LPs like that we have kept out laser focus on funding the best Series A companies in Europe, so we will be doing more of the same."

Asked about the fundraising timeline for Blossom III, Lim told Unquote: "We raised the fund pretty much exclusively over the summer – we usually do this as the market is quieter and we can dedicate a lot of our time to fundraising. We closed the majority of the fund in summer, then closed the remainder around December last year, as an endowment that we wanted to bring on board had to come a little later to the process.

"We did more of this fundraising process on Zoom than the last time around, but we did manage to get to the US to visit LPs, and some managed to visit us, so this was not meaningfully different from other fundraises," Lim told Unquote. "We like the face-to-face process and we form our main relationships in person as much as we can, but operational diligence calls with LPs can sometimes be easier over Zoom. We also used Zoom to meet more of the team at the individual LPs, to get more knowledge of their organisation and to serve them more with more knowledge about us."

Blossom's recent hires include talent partner Kim Goddard, venture hacker Nick Robertson to help with sourcing companies, and Tatiana Chopova as operating partner. The firm intends to make further hires to develop its team, Lim told Unquote. "We have an investment team of three partners and we have made some hires on the operational services side. We have more hiring to do on the investment and operational sides in 2022, including a CMO to help our companies with their outbound efforts, as well as to work on the Blossom brand."

Its new hires will also relate to the continued development of its portfolio, Lim added. "We also want to hire in HR, since some of our companies are growing to be larger organisations where they need to consider their structure, how to build an executive team, how to do remote work, and how to have people in multiple offices."

Investors
The vast majority of Blossom's key investors have re-upped for Blossom III, Lim told Unquote. Almost all of the fund's capital has been provided by institutional investors.

"The thing that is really exciting this time is that the LP base has transitioned quite strongly towards the US, with a long-term capital base," Lim said. "About 70% of our LPs are from the US, and we were fortunate to attract three of the top endowments globally." This represents a shift from Blossom II, which had around half of its capital from US institutional investors.

Investments
Blossom III will continue the VC's focus on Series A rounds. The fund will make 20 investments in total and expects to announce its first deals in Q1 and Q2 2021, Lim told Unquote.

Blossom still intends to be the lead investor in its rounds and its latest fund can deploy tickets of less than USD 10m where needed, but can also deploy enough to lead a USD 40m round, according to Lim.

The fund will target B2B software, consumer internet, cryptocurrency, and financial services, backing companies showing signs of product market fit, Lim told Unquote. Up to a third of the fund will be dedicated to cryptocurrency, reflecting its shift from a niche financial tool to a mainstream asset class, according to a statement.

Although concerns around inflation are on the minds of many VCs, Blossom's target market is still rich in opportunity, according to Lim. "The early-stage market is still very robust. We have heard that things are a bit slower at later stage due to the public markets, and this could filter through, but it would take six to eight months until there is an impact. We don't have any companies going public in the immediate term, so it's not an immediate concern, but we do keep an eye on it."

Blossom's recent investments include participating in Checkout.com's USD 1bn Series D round earlier in January 2022; the VC first backed the company in 2019. Its exits to date include grocery delivery application Dija, which was sold to US-based digital grocery retailer Gopuff in August 2021.

People
Blossom Capital – Alex Lim, Ophelia Brown (managing partners); Imran Ghory (general partner).