Balderton has closed its largest early stage fund of $600 million, to invest at seed and Series A. The new fund follows closely on the heels of the London-based firm’s inaugural growth fund of $680 million announced in June of this year.
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“It’s been a staggering year,” said general partner Suranga Chandratillake to Crunchbase News on raising more than $1.2 billion in funds this year alone, along with a huge increase in investment into European startups in 2021 to date.
An engineer by background and founder of blinkx, Chandratillake spent 12 years in Silicon Valley. He returned to Europe in 2014 and joined Balderton as a partner.
Chandratillake describes Balderton as a “low frequency, high conviction investor.” Each partner will make an average of two, maybe three, new investments per year. Seed is treated with the same voting process and diligence as a Series A investment. An initial check size can range from $1 million to $25 million to fit the opportunity.
The firm invested in Revolut, Aircall and Contentful at seed.
Balderton plans to invest in around 30 new portfolio companies with this new early stage fund. It will reserve part of this fund for early stage, pro rata follow-on funding.
The firm has an investment team of 25 members with ten partners. Seven partners invest at seed and early stage, two partners lead the growth fund who were hired from the Softbank Vision Fund and Goldman Sachs, and one operating partner.
The investment team is on the ground in more cities across Europe. It has expanded outside of London with folks in Berlin and Paris and plans to soon be in the Nordic region as well, Chandratillake said.
The growth fund can and does invest in Balderton’s early stage portfolio, but is not confined to do so. Balderton raised a growth fund as it was an “underserved” part of the market with “some of our companies that we thought were fantastic companies, but that would take longer to raise that Series C than they would have had they been based in downtown San Francisco or Palo Alto,” said Chandratillake.
Through the third quarter of 2021, VCs have invested around $86 billion into European startups, compared to $44.7 billion for the whole of 2020 per Crunchbase data.1
The benefit of U.S. investors setting up shop in Europe is that “they will bring some of their expertise, they will bring some of that experience, in-network so that’s a good thing, because it will help the ecosystem,” said Chandratillake. “On the flip side it also means more competition,” which will mean the firm needs to stay ahead of its game.
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