Europe is routinely criticized by tech industry observers for having too few “growth capital” funds, and that's true when compared to the U.S. That said, the space is far from nonexistent: growth equity investor Kennet just announced it has raised €266 million for its largest fund to date, Kennet VI, which is already being deployed in B2B SaaS companies across Europe.
Kenet specializes in backing established B2B SaaS startups that are founder-owned and either highly capital efficient or fully bootstrapped, i.e. built without outside capital. A great example is Grip, the conference networking app that raised $13 million in 2021, a round led by Kenet.
The Kennet VI fund follows five others that Kennet has run over the past 25 years. The most recent exit was Eloomi in January 2024. The learning experience platform was acquired by publicly listed software company Ceridian, which Kennet said created a cash multiple of 3.1x.
Previous (multiple) exits include Nuxeo (5x exit), Dext (3.8x), CrossBorder Solutions (6.4x), Rimilia (2.5x) and Impartner (2.6x).
Kennet investments are typically the first external funding a company receives and are used to scale and expand internationally, build a world-class management team and accumulate strategic value.
In an interview with TechCrunch, Hillel Zidel, managing director at Kennet Partners, said: “This new fund is very consistent with what we've been doing with our previous funds: B2B software, focused on growth-stage, bootstrapped, capital-efficient companies.”
“We're probably the only group that specializes in this space, and we want to do much more with each of our clients in terms of serving bootstrap founders. Our exits have shown that if you invest in quality companies with strategic value, you can have a successful exit without being dependent on any particular market cycle.”
The Kennet VI Fund was launched in partnership with cornerstone investor Edmond de Rothschild Private Equity, which began investing in the fund in 2017. Bpifrance, British Patient Capital and Federated Hermes Private Equity have also committed to investing in the fund.
Growth funds are on the rise in Europe: Earlier this year, Index Ventures announced a new $2.3 billion fund across multiple stages, with $800 million earmarked for venture investing and $1.5 billion for growth and later-stage companies.
Aside from regular venture capital, the often less visible “growth capital” sector often offers big rewards for entrepreneurs who prefer to retain a lot of ownership and control, but are willing to bootstrap over the long term to reach revenue and profits.