November 29, 2022

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  • UK early-stage investing firm Hoxton Ventures has raised a $215 million fund.
  • Hoxton previously backed security firm Darktrace, telehealth firm Babylon, and delivery company Deliveroo.
  • The fund has no Russian LPs, its partner said.

UK-based venture capital firm Hoxton Ventures has raised $215 million for its third fund, its biggest to date in a sign of intensifying competition to get in early on promising startups.

Hoxton, founded by American partners Hussein Kanji and Rob Kniaz in 2013, will continue to focus on seed and pre-seed consumer, enterprise, and deep tech startups with its latest fund.

The company netted early success by writing checks to security firm Darktrace,


telehealth

company Babylon Health, and delivery firm Deliveroo. All are now public companies with market capitalizations above $1 billion apiece — although they have seen their share price drop from their opening prices since going public, amid a broader hammering of tech stocks. 

For an early-stage investor however, it means high returns and the prestige of accounting for two buzzy tech IPOs.

“We think our second fund has two times as many potential unicorns than our first fund, which did pretty darn well,” Hussein Kanji, partner at Hoxton Ventures, said.

Kanji named language platform Preply, infrastructure-as-code firm Spacelift, delivery startup Bother, augmented reality firm XYZ, and pharma tech startup Peptone as promising startups from Hoxton’s current portfolio. 

Hoxton has raised its third fund comparatively quickly after raising just under $100 million for its second, closed in 2020. That second fund, Insider previously reported, had been somewhat delayed by a funding freeze from the European Investment Fund to UK venture capital firms after Brexit. The EIF, which stems from the EU’s investment bank, was an “anchor” investor for many British funds. The UK’s British Business Bank eventually stepped in with its British Patient Capital initiative to plug the gap left by the EIF.

Kanji said Hoxton had evolved from relying on mostly high net worth individuals in its first fund, to the British Business Bank in its second, to an “overwhelmingly institutional” investor, or limited partner, base in its third. 

“We can’t comment on specific institutions but we were surprised to see how much European institutional support we had,” he added. “The base of limited partners is traditional in the US so it’s nice to see the ecosystem mature here, not just on the fund size but the limited partner side.”

He added that none of the funds in Hoxton’s latest round were of Russian origin, an increasingly awkward question for British startups and investors who have, directly or indirectly, accepted funding from Russian oligarchs. Insider reported this week that fund partners representing two oligarch-backed funds had quietly vacated board seats on UK startups.

Kanji hopes, even with more US funds setting up shop in Europe and early-stage rounds inflating, that Hoxton’s ability to introduce founders to the US market will continue to be a selling point. The firm has added fellow US-UK transplant, Charles Seely, as a partner.

“We know we are good at picking, our founders tell us we are valuable to have on the board and our angle of encouraging companies to scale in the US and unlock connections there still holds, even with all the great US funds opening up here,” Kanji said, warning that bigger funds might see investments as “disposable checks.”

https://www.businessinsider.com/hoxton-ventures-raises-215-million-for-seed-pre-seed-startups-2022-3