To kick off 2020, one of Europe's newer -- and more successful -- investment firms has closed a fresh, oversubscribed fund, one sign that VC in the region will continue to run strong in the year ahead after startups across Europe raised between $35 billion and $36 billion in 2019.
Felix Capital, the London VC founded by Frederic Court that was one of the earlier firms to identify and invest in the trend of direct-to-consumer businesses, has raised $300 million, money that it plans to use to continue investing in creative and consumer startups and platform plays as well as begin to tap into a newer area, fintech -- specifically startups that are focused on consumer finance.
Felix up to now has focused mostly on earlier-stage investments -- it now has $600 million under management and 32 companies in its portfolio in eight countries -- based across both Europe and the U.S. Court said in an interview that a portion of this fund will now also go into later, growth rounds, both for companies that Felix has been backing for some time as well as newer faces.
As with the focus of the investments, the make-up of the fund itself has a strong European current: the majority of the LPs are European, Court noted. Although Asia is something it would like to tackle more in the future both as a market for its current portfolio and as an investment opportunity, he added, the firm has yet to invest into the region or substantially raise money from it.
Felix made its debut in 2015, founded by Court after a strong run at Advent Capital, where he was involved in a number of big exits. While Court had been a strong player in enterprise software, Felix was a step-change for him into more of a primary focus on consumer startups focused on fashion, lifestyle and creative pursuits.
That has over the years included investing in companies like the breakout high-fashion marketplace Farfetch (which he started to back when still at Advent and is now public), Gwyneth Paltrow's GOOP, the jewelry startup Mejuri, trend-watching HighSnobiety and fitness startup Peloton (which has also IPO'd).
It's not an altogether easygoing, vanilla list of cool stuff. Peloton and GOOP have been mightily doused in snarky and sharky sentiments; and sometimes it even seems as if the brands themselves own and cultivate that image. As the saying goes, there's no such thing as bad press, I guess.
Although it wasn't something especially articulated in startup land at the time of Felix's launch, what the firm was homing in on was a rising category of direct-to-consumer startups, essentially all in the area of e-commerce and building brands and businesses that were bypassing traditional retailers and retail channels to develop primary relationships with consumers through newer digital channels such as social media, messaging and email (alongside their own DTC websites).
This is not Felix's sole focus, with investments into a range of platform businesses like corporate travel site TravelPerk, Amazon -backed food delivery juggernaut Deliveroo and Moonbug (a platform for children's entertainment content) and increasingly later-stage rounds (for example it was part of a $104 million round at TravelPerk; a $70 million round for marketplace-building service Mirakl; and $23 million for Mejuri).
Court's track record prior to Felix, and the success of the current firm to date, are two likely reasons why this latest fund was oversubscribed, and why Court says it wants to further spread its wings into a wider range of areas and investment stages.
The interest in consumer finance is not such a large step away from these areas, when you consider that they are just the other side of the coin from e-commerce: saving money versus spending money.
"We see this as our prism of opportunity," said Court. "Just as we had the intuition that there was a space for investors looking at [DTC]... we now think there is enough evidence that there is demand from consumers for new ways of dealing with money and personal finance."
The firm has from the start operated with a board of advisors who also invest money through Felix while also holding down day jobs.
They include the likes of executives from eBay, Facebook and more. David Marcus -- who Court backed when he built payments company Zong and eventually sold it to eBay before he went on to become a major mover and shaker at Facebook (and now has the possibly Sisyphean task of building Calibra) -- is on the list, but that has not translated into Felix dabbling in cryptocurrency.
"We are watching cryptocurrency, but if you take a Felix stance on the area, it's only had one amazing brand so far, bitcoin," said Court. "The rest, for a consumer, is very difficult to understand and access. It's still really early, but I’ve got no doubt that there will be some things emerging, particularly around the idea of 'invisible money.' "