Connect Ventures, a leading European tech venture capital firm, has announced the closing of its fourth fund, raising an impressive $80 million. The London-based firm has a strong track record of backing successful startups such as Typeform and TrueLayer. The new fund will enable Connect Ventures to continue its focus on seed and pre-seed investments in product-focused companies across various sectors including B2B SaaS, fintech, consumer, healthcare, and web3.
Key Takeaway
Connect Ventures has closed its fourth fund, securing $80 million in capital investments. The fund will support the firm’s seed and pre-seed investments in product-focused startups across multiple sectors.
Connect Ventures: A Pioneer in Product-Focused Investing
Connect Ventures has been at the forefront of product-focused venture capital in Europe since its founding over a decade ago. Taking inspiration from the successful product-led approach of Silicon Valley, Connect Ventures has established itself as one of the few VCs in Europe with a focus on product-driven startups. This strategy has paid off, with notable successes such as Typeform, which recently raised $135 million in a Series C round.
Backers and Investments
Connect Ventures’ impressive fourth fund has attracted continued support from existing investors, including British Patient Capital, De Agostini, Big Society Capital, Top Tier, and Molten Ventures. Additionally, the fund has gained new limited partners such as Aldea, Jason Green, Sella Venture Partners FoF, and Francesco Simoneschi, founder and CEO of TrueLayer.
Connect Ventures invests in seed and pre-seed stages, typically making initial investments ranging from $150,000 to $2.5 million. The firm’s portfolio already includes promising companies spanning various sectors, such as B2B health, generative AI, B2B payment infrastructure, B2B SaaS, and developer tools.
The Connect Ventures Team and Market Insights
Connect Ventures maintains a lean and focused investment team consisting of its co-founders and managing partners Sitar Teli and Pietro Bezza, general partner Rory Stirling, and recently joined operating partner Katy Turner. Teli’s insights reflect a deep understanding of the current tech investment landscape in Europe.
Teli emphasizes the importance of raising the right amount of capital to fund key milestones and maintain capital efficiency. She notes that the market is shifting back towards capital efficiency and focusing on product-centric companies that offer software, strong gross margins, and scalability.
While the bear market has brought a correction in tech investment, Teli sees this as an opportunity for startups to become more capital efficient and achieve healthy growth. However, she cautions against overcorrection and encourages companies to maintain their focus and leverage constraints for optimal resource deployment.
The Future of Generative AI and Investor Sentiment
Connect Ventures recognizes Europe’s strength in technical universities and the talent pool when it comes to generative AI. Teli highlights the significant foundational work done in this field by European researchers. While deploying capital into foundational models may require substantial funding, Teli believes in the potential of small, well-funded teams to create compelling technologies.
Regarding investor sentiment, Teli acknowledges the current challenges for new funds and institutions. Many are focused on managing their existing portfolios and are hesitant to add new managers. However, Teli believes that it is an opportune time to deploy capital, given the excellent pricing in the market. She emphasizes the importance of not trying to time the market and instead focusing on long-term value creation.
Connect Ventures’ successful fundraising for its fourth fund positions the firm to continue its support of product-focused startups in Europe. With its experienced team and strong investor base, Connect Ventures is well-positioned to identify and nurture the next wave of innovative companies in the European tech ecosystem.
