Management of private Germany-based media group Georg von Holtzbrinck’s corporate venturing unit have provided 7% of the €177m ($230m) committed to its fourth fund after taking the operation 100% independent.
Typically, general partners of a venture capital (VC) firm invest 1% to 3% of a fund. Martin Weber, general partner at Holtzbrinck Ventures (pictured), which spun out of Georg von Holtzbrinck as part of its latest fundraising, said his team’s €12.4m commitment came in part from the crystallization of performance fees – called carried interest – from its three previous funds being reinvested in the fourth. Last year, one of his partners, Konstantin Urban, left to form a start-up, Diapers.com, but Weber said there were no other or future team changes planned.
Holtzbrinck Ventures has invested nearly €150m in more than 80 companies since its launch in 1999, including Proximic and Searchmetrics in the past month, and sold an undisclosed number, including Brands4Friends and CityDeal to online auction company eBay and consumer coupon company Groupon, respectively.
Georg von Holtzbrinck has sold a large part of its corporate venturing assets of an undisclosed size in these three prior funds to the fourth fund at a reported premium to net asset value after advice from consultants Campbell Lutyens.
Georg von Holtzbrinck has in turn committed to the fourth fund (known as re-upping) with an equal commitment from US-based financial investor HarbourVest Partners, which backed a similar corporate spin-out from Nomura last quarter.
Michael Brockhaus, managing director of strategy and mergers and acquisitions at Georg von Holtzbrinck, said: "Obtaining a professional international powerhouse like Harbourvest as a partner for Holtzbrinck Ventures provides a solid basis for future investment activities in the digital media sector [and] also bears witness to over 10 years successful development as a corporate VC. We are happy to continue our support of the team for the next decade."
Weber said the new fund carried normal venture capital terms off 20% carried interest but would be a slightly shorter life than 10 years in order it to make new deals as well as follow on from investments made in its three prior ones.
Holtzbrinck Ventures predominantly makes seed-stage investments in Germany, Austria and
Switzerland after having set up Parship and Experteer while retaining stakes in Groupon, Zalando, Adscale and eDarling.
Weber said the lack of competition in early-stage deals and a dynamic market for entrepreneurs able to start companies with relatively low investment but requiring cash to scale up and become international quickly meant it was a great environment for Holtzbrinck Ventures to become independent.
He added: Independence brings our platform to another level and it increases our investment opportunities to bring HarbourVest in. We have not changed much as we were treated as independent [at Georg von Holtzbrinck] rather than a department. You cannot hold a successful team together for 10 years unless you have market standard terms and let the team run the business as if investing is dependent on the core business you invest in boom conditions and not in bad times."