HV Capital, the Germany-based venture capital firm spun off by publisher Holtzbrinck Publishing Group, launched a €430m ($489m) continuation fund yesterday to continue supporting portfolio companies in later-stage deals.
The vehicle, HV Coco Growth, will take over all existing investments from the firm’s HV IV and HV V funds as well as its HV Co-investment funds, which made investments from 2010 to 2015. It is billed as the first of its kind to be launched in Germany.
Private equity firm HarbourVest Partners is anchor investor for the fund, while Holtzbrinck Publishing is a limited partner along with Pathway Capital, LGT Capital Partners and unnamed financial institutions and family offices.
Founded in 2000 as Holtzbrinck’s corporate venturing arm, the firm was spun off in 2010 as Holtzbrinck Ventures and later rebranded as HV Capital in 2015.
Martin Weber, general partner at HV Capital, said: “By launching the first continuation fund in the German VC scene, HV Capital is breaking new ground in the industry.
“With HV Coco Growth, we are transferring many strong investments such as FlixMobility, Global Savings Group and SumUp from existing funds into a new structure. This gives us more leeway to support our portfolio companies in the long-term.”
While still uncommon, a continuation fund would allow the firm to keep stakes in portfolio companies it believes will yield greater returns down the road while still providing returns for LPs.
More startups are showing a preference for sticking with private funding instead of going public or pursuing an acquisition, pulling in greater numbers of nine-figure rounds, particularly as share prices have fluctuated significantly for many companies that have recently gone public.
HV Capital’s investments between 2010 and 2015 include retail savings platform developer Groupon, food delivery service Delivery Hero and meal kit provider HelloFresh – all of which it has exited – and current portfolio companies including sports venue finder Urban Sports Club, vehicle marketplace Carmundi and online travel agency Onlinetours.
David Kuczek, another HV Capital general partner, told Sifted: “We thought we could get [the continuation fund] done in a month and I could just make five calls. When actually, I had to make 70 calls and explain the story over and over again to different parties, as some LPs understand it, some do not. Some like it, some do not.
“[The founders] said, as long as nothing really changes for me and we can get follow-on investment in the future, then why not?”
HV Coco Growth does not seem to include portfolio companies from more recent funds, such as HV Capital’s Fund VI, which closed in 2015 with $331m in commitments.
More recently, HV Capital disclosed a $625m Fund VIII in late 2020 when it rebranded from Holzbrinck Ventures, modifying its strategy to allow for deals at later series B and C stages, though its core focus remained focused on seed and series A rounds. It it is planning to launch more funds in 2022 and 2023.
