High-Tech Gründerfonds, a €272m ($370m) German state-backed fund supported by industrial groups BASF, Deutsche Telekom, Siemens, Robert Bosch, Daimler and Carl Zeiss, is preparing to close its second seed fund after the summer as policymakers concentrate on helping smaller businesses.
Alexander von Frankenberg, managing director of High-Tech Gründerfonds, at the European Venture Club conference in France, said an unnamed five of the six corporate venturing backers of the first fund had recommitted to the second fund, which was targeting €280m.
He added that five new investors had also committed and "another two to three" were likely to join as well by September. In October, von Frankenberg said companies had also provided more than a fifth of the €250m in follow-on funding to the 205 companies it had seeded over the previous five years.
The support follows a strong record by High-Tech Gründerfonds. In February, Evotec, a Germany-listed chemicals company, agreed to buy Kinaxo Biotechnologies, a local drug discovery company backed by High-Tech Gründerfonds. Von Frankenberg said it made 3.6 times its money on the exit.
Separately, France Telecom’s Innovacom corporate venturing unit is understood to be working with the country’s largest investor in venture capital funds, Groupe Caisse des Dépôts’ CDC Enterprises, to set up a seed fund in France.
The expected success in raising the second Gründerfonds fund and interest by corporations in earlier-stage deals has come against a backdrop of broader support by European politicians for entrepreneurs.
Last month, the European Commission started a consultation (until 10 August) on setting up a single market for European venture funds by making it easier for them to raise money from and invest in other countries from a home base on the continent. (To contribute click here and to see the newly-formed European Venture Fund Investors Network response to the green paper click here.)
The public and private-backed European Investment Fund has already started its projects to promote angel and corporate venturing, as revealed at the Global Corporate Venturing Symposium in May (see related news).
France through its tax systems encourages rich people to invest across boarders, while, in the UK, the government has started a consultation on tax incentives to support smaller businesses.
The UK also said there would be more public money for Enterprise Capital Funds, political pressure on banks to lend and provide minority equity to businesses, wider tax reliefs for Venture Capital Trusts and Enterprise Investment Schemes (EIS) and the formation of the Business Angel Seed Investment Scheme in April alongside a £50m ($75m) Angel Co-investment Fund to leverage investment from angel syndicates.
The angel fund follows attempts to standardize contracts between investors and start-ups at its earliest stage – the seed round. Last week, SeedSummit, a UK-based organization of 22 venture capital and investment groups, after working with law firm Brown Rudnick, issued two suggested term sheets, the general SeedSummit Term Sheet and an EIS-friendly variant. You can see the documents here: http://seedsummit.org/legal-docs/
This follows similar forms in the US, such as Orrick’s term sheet at https://tsc.orrick.com/
For the second meeting of the Venture Connectivity Club in London, organised by Global Corporate Venturing and Angel News in association with Nesta and London and Partners, as a networking forum between angels and corporate venturing units and other investors and interested parties, please register here: http://ventureconnectivityclub.eventbrite.com/