Saul Klein is a busy man. As co-founder with his father Robin, of LocalGlobe, one of the longest-running VCs in Europe, he has overseen a wide range of initiatives. Among other things, the pair are passionate investors and philanthropists in LocalGlobe’s HQ area of Somers Town, London, and are also involved in the more conventional business of venture investing in startups.
Although the LocalGlobe brand name and fund remains, now the new umbrella brand for all the Kleins' activities will henceforth be Phoenix Court Group (for the purposes of this article, I will refer to it as PCG). The group is also unveiling how its four new funds will operate, plus how it will deploy 10% of its profits to a charitable foundation.
The firm has now outlined how it will have $500 million at "the first close" to deploy across its funds: LocalGlobe (early stage), Latitude (early "growth" stage) and two completely new investment vehicles, Solar and Basecamp.
A healthy 10% of PCG’s profit will go into its Phoenix Court Works foundation to help local groups in Somers Town.
Klein is also pushing the idea that PCG’s King’s Cross, London, location puts it at the heart of a European region he is dubbing “the next Palo Alto” — more on that later.
So, first to the fund structures. TechCrunch has peered through the marketing buff to come up with these definitions of PCG’s funds:
• LocalGlobe (seed to Series A)
• Latitude (Series B, and later)
• Solar (Series C and beyond, as well as investing in listed tech stocks/public markets)
• Basecamp (LP fund to invest in other smaller VCs, angels and solo GPs)
With this range of fund vehicles, this will make PCG a “lifestage” tech investor, able to invest from the earliest stages of startup, all the way to the latest stage and to the public markets. It's also now an LP in other funds (via Basecamp), especially emerging markets like Africa and Latin America.
But zoom out for a moment, and Basecamp is effectively the retrofitted moniker PCG is giving to the several initiatives the Kleins backed, such as Seedcamp in 2007, company builder Zinc.vc in 2017 and music industry platform Platoon, among others. Basecamp also partners with the diversity-oriented Newton Venture Program, which LocalGlobe co-founded with the London Business School. Phoenix Court Works has underwritten 60 scholarships to this program.
PCG also now argues that the region within a 4-hour train journey of its base in King's Cross and St. Pancras (which comprises Paris; Amsterdam; Brussels; northern UK cities such as Manchester, Leeds, Liverpool, Newcastle; Bristol; Oxford; and Cambridge) is home to over 40 million citizens and seven of the world's top 30 universities and contains a large number of Europe’s unicorns. As mentioned earlier, it calls this region of Europe a "new Palo Alto" — although the marketing spiel is overly labored. Furthermore, PCG hardly has a monopoly on this region — no matter what you call it — given any other London VC a tube ride from King's Cross has access to exactly the same ecosystem.
However, Saul Klein said in a statement: “Despite being the third best producer of high growth private companies globally, this geography is still underserved by investors, especially at the breakout and scale-up stages. Not only is there an acute funding gap at the scale-up stage here, less than 20% of the capital invested at that stage is domestic, so when companies in our region are acquired or move to the public markets, UK pensioners and savers miss out, while their Canadian, Australian and Singaporean equivalents benefit.”
PCG will also support Phoenix Court Works, its foundation that supports organizations in the North London neighborhood of Somers Town, as well as more broadly in Camden, and is funded by 10% of profits from Phoenix Court Group’s management company and 2% of carry from all the funds.
Dealroom’s recently published VC Prominence Rank showed largely U.S.-based Accel on 24 unicorns and Sequoia on 20, while LocalGlobe has mainly invested in Europe and turned up 18 unicorns at seed stage. LocalGlobe’s unicorns include At-Bay, Hailo, Motorway, TravelPerk and Zego.
Speaking to me over a call, Klein expanded on the plethora of these funding vehicles: “If you look at the companies that get really big, they don't just get really big in the private markets; they get really big in the public markets."
"We all think about Sequoia which has this fund that can invest in both private and public companies, that was 15 years in the making. So our view is if you have the ability to get into companies at seed stage, why wouldn't you want to continue to invest in the breakouts, such as with Latitude, three to four years before these companies are capable of going public? We had eight IPOs last year. Why wouldn't you want to invest again? That's Solar. If they're great companies that still have a long way to go, keep holding. Right? We've now got the full life stage funding for companies.”
But what Klein seems to be ultimately driving at, even with the rather forced stuff about "the New Palo Alto," is that he wants to do VC differently to how it's been perceived in the past. After all, there just aren't many other VCs (at least that I know of lately) doing this wide range of both hard-core investing and taking an interest in their local area, and putting 10% of profits and 2% of carry into philanthropic activity. It's clear that PCG would like to build a "new kind of Bay Area," but this time with fewer "tech bros" and more "tech values."