LeadBlock plans €100m second close for blockchain fund

The Paris- and London-based fund is in discussions with potential LPs, including institutional investors, and has already secured some commitments, Puel said, declining to disclose details because the discussions are private. The commitments have come from investors in Russia, the Middle East, Asia and the US.

The fund held its first close of €20m last month, with funds raised primarily from Asian, European and American family offices.

In spite of the Covid-19 crisis, which created some uncertainty around fundraising in March last year, the firm has been "overwhelmed" with interest from potential LPs and startups focused on digitalisation, Puel said. It aims to announce the second close of its fund in mid-2022, he said.

LeadBlock will invest in seed or series-A rounds and opportunistically in series-B rounds, with an average ticket size of €500,000-1.5m per investment, Puel said. LeadBlock's LPs may also co-invest additional capital, he said. The eight-year fund will deploy the initial capital over the first three years. Around half of the total commitments will be earmarked for follow-on funding. It is planning a three- to five-year investment horizon for each company in which it invests, before exiting via M&A, Puel added.

LPs in the fund would be "very disappointed" if they did not receive an annual return of at least 30%, Puel said. He added that LeadBlock would not invest in companies unless they have the potential to provide a 25x total return.

The firm plans to invest exclusively in startups that use blockchain to assist corporations. Its target sectors for investment include health, agriculture, food, energy, renewables, finance, aerospace, defense, and consumer goods, Puel added.

LeadBlock launched the fund in March 2020 and went on to lead a €3.2m seed round for Connecting Food, a startup that provides live audits of supply chains for food manufacturers and distributors. Funds from the first close will enable the fund to invest in three deals that will soon be made public, Puel said.

The firm's pipeline of potential investments include companies in Europe, and it has also looked at Asia-Pacific and US-based companies, Puel said. Most of the companies it is studying were founded three to four years ago, and already have a product on the market and at least one customer. LeadBlock plans to take an active role in its portfolio companies, serving on boards and providing advice, Puel added.

LeadBlock's last annual study of European B2B blockchain startups found that there will be a significant financing gap for the sector over the next three to five years, even after the disbursement of grants from the EU. Its sample of 250 companies has a total funding need of €350m over the next 18 months, Puel said, making the space a fertile ground for investment.

LeadBlock was founded in 2019 by Puel, David Chreng-Messembourg and Baptiste Cota. Puel was previously managing partner at BTR Capital Advisors, an investment adviser focusing on venture capital and special situations in Europe and Asia, where his investments included several startups that applied blockchain to food safety, as well as companies in healthcare and authentication. Chreng-Messembourg and Cota were both previously equity analysts at Goldman Sachs, where they focused on the energy and renewables sectors, respectively.

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