Publicly-listed UK VC Draper Esprit acquires Seedcamp’s Fund I & II for $23.6M

Following on from its announcement that it would invest in other early-stage VC firms in Europe, and doing so by investing in the UK’s Seedcamp, and Episode 1 Partners, Draper Esprit, the publicly-listed VC firm based in London, has gone a stage further. It’s now acquired Seedcamp Funds I & II for £17.9 million (€20 million / $23.6M).

The original Fund 1 size was €2.5m and was raised in 2007, while the Fund II size €5.2m and was raised in 2010. The move delivers a 4x return to to the LPs that invested in those two funds, and also means Draper Esprit will pick up a minority (but a significant minority) stake in fintech unicorn TransferWise.

Seedcamp’s Fund I, launched in 2007 and Fund II, raised in 2010, comprises some high profile companies including Codacy, Edited, Erply, Fishbrain, Codility, Winnow, Codeship, and among others.

However, Seedcamp said it would continue to operate “as is” and its third fund “is unaffected as part of this.” In other words, Seedcamp continues to have wiggle room with its third fund.

As part of the deal, Seedcamp will continue to manage the companies as part of the sale. It also simplifies Seedcamp’s LP structure, moving it from having multiple LPs to just one. It also means Seedcamp will have access to follow-on investment from Draper allowing it to invest all the way from Seed up to a B-round.

Meanwhile Draper Esprit, a publicly floated VC, yesterday reported 44% annualised growth across their portfolio over the past 6 months. Draper Esprit portfolio’s last reported NAV was £23.5 million (€26.3 million), resulting in an increase of £5.6 million (€6.3 million) (~7p per share).

Seedcamp Co-founder and Managing Partner, Reshma Sohoni, commented: “We are thrilled to help our Seedcamp companies scale to the next level with the support and firepower of Draper Esprit. As the Seedcamp team continue to manage Funds I and II, Draper is the perfect partner to help us manage these businesses.”

Seedcamp Managing Partner, Carlos Eduardo Espinal, added:

“We see this as a great outcome working alongside experienced and knowledgeable investors who’ve supported us for many years. We are always looking at innovative ways to deliver exceptional returns to our LPs and believe this transaction is a win-win for everyone involved.

Simon Cook, CEO Draper Esprit plc commented: “Although principally a primary series A, B and C VC Growth investor, we have also been very active over the years as a secondary tech investor in Europe having acquired a number of well-known VC portfolios and increasingly taking large direct stakes in later stage companies. Together with our recently announced seed fund of funds strategy we can offer long term patient capital solutions for all European tech companies and their investors outside of the constraints of a typical 5+5 year fund. This acquisition further bolsters our growing secondary business; increases our exposure to a really good portfolio of European technology companies including Transferwise, one of Europe’s most successful startups.”

A Seedcamp spokesperson added that its investment and ops team would not be affected by this deal and won’t be working for Draper in any other way than they would be accountable to other LPs.

Overall this looks like a great deal for all parties. Draper Esprit acquires a decent portfolio at a stroke and Seedcamp now gets access to later stage funds.

Seedcamp was constrained by the 5+5 years investment model that meant it had to sell off their companies. Now they don’t, because they’re funded by a publicly floated single investor that doesn’t have a 5+5 year timeframe, and can invest from Seed to Series B.

Published at Wed, 25 Oct 2017 10:56:50 +0000