We saw how SoftBank shrugged off some of the more exuberant investments of the past few years last week when news broke that SoftBank had sold its entire stake in edtech startup Kahoot at a loss. This week, we’ll find out what SoftBank is doing to diversify its capital allocation while reducing its own immediate risk: data transfer protocol SoftBank said it has taken a major stake in its next fund, part of a $300 million round it raised to double down on growth rounds in Europe.
For context, DTCP is a fund that started out as the venture capital arm of German telecommunications company Deutsche Telekom but now operates as an independent firm – DT is still an investor, but in a key rebranding, DTCP now stands for “Digital Transformation Capital Partners”.
Others closing for the first time include DT, as well as unnamed institutional, pension fund, corporate and family office investors.
The fund, DTCP’s third, marks how far the European ecosystem has come in terms of growth rounds: Raising growth rounds in the region was once a rarity, and more promising startups established in Europe fled If they want to scale, the US can attract investors there. Today, they are more likely to find investments closer to home.
DTCP’s latest fund is expected to close in March 2023, with the goal of bringing it to $500 million (or a hard cap of $600 million).
Among them, SoftBank and fund founder DT are the anchors — by far the biggest backer — Thomas Pruss, managing partner of DTCP Growth, said in an interview.
The company has made investments from the fund — specifically, it has invested An additional $15 million Entered the Series B round of conversational AI platform Cognigy.ai, bringing the total raised in the round to $59 million.
More generally, DTCP’s focus will be on cloud-based enterprise software, SaaS, cybersecurity, web3, artificial intelligence and fintech – all broad categories in Europe and Israel, key regions that DTCP will cover, and the U.S.
It’s worth noting that while there are still investors (even in the current market) focused on deep tech and other categories that may take a long time to see returns, DTCP is taking a more pragmatic view – which could cause SoftBank resonance.
The fund’s goal is to make approximately 25 equity investments of $200 to $25 million in early-stage growth or growth-stage businesses. A “defensible market position and technological superiority” is a priority, as is another key requirement: an ARR of at least $10 million to be considered support.
“We’re still in the Stone Age when it comes to deep tech,” Pruss said.
It will be interesting to see how the role of more localized VC firms, which are partners with large global companies that have started to generate interest in investments outside their home markets, will evolve over the next few years. greater interest. While SoftBank will likely continue to make direct investments, investing in a fund like DTCP helps it gain more deal flow, both as an indirect backer and to vet more companies it might want to acquire outright.This is a particularly interesting feature because SoftBank is it is said Downsizing operations in several markets, including Europe, has reduced the number of teams it may have locally.
DTCP’s first fund in 2015 and second in 2018 totaled $410 and invested in 32 enterprise software companies in Europe, Israel, the U.S. and Asia, with DTCP noting that 11 of those investments have been acquired or listed to date. They include Auth0, Fastly, Sagnavio, and Guardicore.