- New venture capital firm Crane Venture Partners has closed a $90 million seed fund focused on European enterprise startups.
- Veteran investor Krishna Visvanathan predicted that Europe will produce a multi-billion-dollar tech giant in the enterprise space in the next 5 or 10 years.
- The continent has already produced global enterprise leaders such as ARM and SAP, but otherwise lags behind the US and China when it comes to supersized tech firms.
- Crane has already invested in several buzzy UK startups, including security firm Tessian and AI identify checking startup Onfido.
- The new fund comes as European investors increasingly focus on “deep tech” such as artificial intelligence, life sciences, and energy.
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New venture capital firm Crane Venture Partners has closed a $90 million seed fund focused on early-stage European enterprise and data startups.
The London-headquartered firm has invested in a number of buzzy European startups to date including security startup Tessian and AI identity-checker Onfido.
Its four-strong investment team typically writes checks of between $500,000 to $3 million, with the firm planning to invest in seed rounds, rather than put in bigger sums in Series A and B rounds. The goal is to help enterprise founders bridge the funding gap between pre-seed and Series A funding.
Crane’s fund comes after Business Insider reported in 2017 that several new funds were struggling to raise funding from the European Investment Fund (EIF), thanks to Brexit. The EIF has been a major investor in UK venture capital, and the sudden funding freeze caused setbacks for several firms.
Sources told Business Insider that Crane had originally been impacted by the freeze, but it appears the firm has overcome that hurdle. It now counts the British Business Bank and MassMutual Ventures as its anchor investors.
The two founding partners, Scott Sage and Krishna Visvanathan, originally worked as a duo for the venture capital firm DFJ, now known as Draper Esprit. The pair mostly invested in enterprise companies, and then zeroed in on data-focused startups for their own fund.
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Visvanathan told Business Insider: “Everyone looks at enterprise deals, but what we lasered in on was two additional elements.
“We pinpointed the pervasive impact of data on the enterprise. Truly, when we started talking to [fund] investors in late 2015, there weren’t many people talking about the combination of the two. We said we wanted to invest in companies that have data as a core part of their enterprise offering. If it didn’t leverage data, it’s not a fit for us.”
He added: “What was peculiar to Europe was the challenge of getting from a first angel, pre-seed round to an A round as an enterprise founder. Maybe you have $1 million or more in pre-seed funding, you have a product, you have a few customers, but then the real challenge is raising the next set of funding because you’re not quite ready for Series A.”
Europe will produce another ARM or SAP in as little as five years
Visvanathan has been investing since before the dotcom crash and has long focused on enterprise, investing in hardware and semiconductors through to software.
During his first decade of investing at investment firm 3i, he backed semiconductor firm Icera, whose founders and execs have gone on to set up driverless car startup FiveAI and AI chip firm Graphcore.
Asked if Europe should pin its hopes on producing a megahit tech firm in the enterprise space — rather than trying to outgun Silicon Valley in consumer tech — Visvanathan pointed to SAP and chip firm ARM and said Europe was due another similar giant.
“You have two last-generation enterprise titans from Europe,” he said. “We believe we will start to see, in the next five to 10 years, emerge from Europe, a giant global category leader in the enterprise space. Hopefully, we’ll back one or two of those.”
Outside of the Crane portfolio, Visvanathan pointed to European automation software startup UiPath, one of the most valuable startups in the world after a $568 million raise. One of its major competitors is another European firm, UK-based Blue Prism, currently worth £1.5 billion ($1.9 billion). Other buzzy enterprise startups include Dutch infrastructure firm Elastic, and French search software firm Algolia.
Visvanathan predicted that UK-based Graphcore could well be Europe’s next giant. “I know the founders well — I backed them at 3i,” he said. “The AI chip market is so huge. Nvidia is the market leader but, if they crack it, they’ll be the next multibillion-dollar chip company to come of Europe.”
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