HV Capital closes €710M fund amidst the wider European and global funding downturn

If you’ve heard of Flixbus, SumUp, StudiVZ, Seatwave, Cafe Press, Zalando, Wooga, HelloFresh, Depop, Delivery Hero and Agreena, then you’ve heard of companies invested in by HV Capital. The German early- and growth-stage VC has been a stalwart of the European tech startup ecosystem since at least the early 2000s, funding largely German-born companies which have usually scaled both in the large DACH market and often spreading internationally.

It’s now closed the its ninth “Fund IX” at €710 million, its largest ever fund to date, and backed by institutional investors from Europe and the United States.

Prior to the news above, the largest fund to close in Q1 this year was HighTech Gründerfonds' (also a German friend) with nearly €500 million for Fund IV. In addition, McWin Capital Partners' closed a €300 million Food Ecosystem Fund.

The HV Capital fund will be split into two vehicles, “Fund IX Venture” and “Fund IX Growth” to target companies from seed to Series D and beyond.

Four investments have already been made from this new, such as in Berlin-based SPREAD, Berlin-based Polyteia, Munich-based ecoplanet and Copenhagen-based Agreena.

The fund will also build on HV Capital’s stated commitment to advancing ESG themes in VC. It’s committed to Article 8 of the EU’s Sustainable Finance Disclosure Regulation (SFDR). Article 8 products are those “which promote environmental or social characteristics and which integrate sustainability into the investment process in a binding manner.”

Thus, HV Capital says it will target 33% female representation in C-suite-level positions across the portfolio. Plus, 30% of the funds allocated will go to companies aligned with the Climate Action & Environmental Sustainability criteria of the European Investment Fund (EIF), by the end of the fund’s lifecycle.

In a statement, Rainer Märkle, general partner at HV Capital said: “Fund IX will allow us to partner with outstanding entrepreneurs, who from every industry and market across the continent, are making incredible differences to the way we live our lives.”

HV has also put its money where its mouth his, hiring female investors like Zuzanna Czapinska, recently promoted to investment manager.

The VC firm has invested in around 225 internet and technology companies, supporting startups with ticket sizes ranging from €500,000 to €60 million, has offices in Munich and Berlin, and €2.7 billion assets under management.

This latest news shows the continental European VC is managing to keep its head above water in more turbulent economic times.

The Q1 2023 European Venture Report from PitchBook found the European venture deal value fell 32.1% quarter-over-quarter, while the number of deals dropped 19.2% in Q1 2023.

There has been a sharp fall in startup funding, late-stage venture has an increased share of deal value compared to early stage and there’s a lot more M&A and consolidation with the IPO markets effectively closed.

However, Europe’s funding downturn simply matches the global funding downturn of 53% year over year, according to Crunchbase.