Global Founders Capital is a Berlin-based early-stage VC firm with close ties to German startup factory Rocket Internet, and will become the venture arm of Rocket Internet.
The company has previously raised two $1 billion funds, and just a few years ago its name appeared on dozens of deals a year. But then things quieted down. Now I understand why. Going forward, we will only invest from Rocket Internet's balance sheet.
Last year, the Financial Times reported that Global Founders Capital was in the midst of a major strategic shift. A few weeks ago, the VC firm reached out to TechCrunch to confirm the change in direction and discuss the reasoning behind it.
“In the interest of transparency, there have been significant changes at Global Founders Capital in recent years in terms of fund structure and team composition,” says Global Founders Capital Partner David Seitev (pictured above). told us.
Mr. Santeff believes that there are not many good opportunities that meet the company's standards, and that it does not need more capital to remain competitive, and that it is not the best time to invest, so the company The company said it decided it was not the right time to raise new funds. to other investors for trading.
Global Founders Capital was initially established as a traditional VC firm with multiple limited partners participating in funds. In our first fund, we backed then-future unicorns, including Personalio, Revolut, and SumUp. With its second fund, the company invested in several companies featured on TechCrunch, including Pennylane, Ankorstore, and Seyna.
Before joining Global Founders Capital seven years ago, Sainteff worked at Rocket Internet, an early investor in Global Founders Capital. So there was a close relationship between them from the beginning.
“Following the rollout of this second fund, we have decided not to raise any new funds. Instead, we will use Rocket Internet's capital,” he confirmed. “On his balance sheet, he has €300 million available for venture investments. He has no plans to hold any fundraising events.”
Frankly, this is a bit strange since the company's past performance seems to have been very good. The first fund is expected to generate returns of three to four times, Saintoff said. “It's too early for a second fund.” [to say],” he continued. “But there are also some clear winners like Penny Lane. We came in at the pre-seed stage and the company is valued at over €1 billion.”
With the new strategy, Global Founders Capital is much smaller than before, with the remaining partners being Fabricio Pettena, Don Stalter, Cedric Aselman, Seitev, and of course Oliver Samwer, co-founder and CEO of Rocket Internet. There were only 5 people.
The new version of the company also focuses only on early-stage investments, with follow-on investments in later rounds (Series A, B, C, etc.).
Did Global Founders Capital choose not to raise a third fund because it did not have enough support from potential limited partners, or because of the current technology recession (artificial intelligence boom) compared to 2021? )? Perhaps the decision was influenced by both factors.
“It wasn’t the best time to raise money.” [limited partners]” said Santeff. “I think it would have been difficult to have the need to put in capital.”
“If you have 300 million euros in the bank, it's an easy decision to make,” he added. “If other VC firms were in the same position, they would have made the same decision. If the terms are appropriate and favorable, we do not rule out the possibility of raising funds.”
For now, the pivot is a reversal of much of the fund's earlier expansion, which saw it expand into more geographies, technology sectors and funding stages, and put the Global Founders Capital name on numerous deals. .