Switzerland and Germany-based growth investor COI Partners (formerly Co-Investor Partners) has completed the first closing of its new €120m fund for growth-stage startups in the DACH region. For COI, that means investing at Series B and up, and also doing some more private-equity deals.
What's COI Partners' sector and geographic focus?
COI Partners invests in high-growth startups that have a proven business model, positive unit economics and that are ready to scale. It is sector agnostic and has historically invested in verticals such as IT and software, consumer and retail, life sciences, technology and industrial.
The fund typically invests between €15m-30m in initial and follow-on investments.
COI Partners does not allocate a specific amount of capital to each country in the DACH region. Historically, the largest portion of its investment has gone to German startups as a “natural consequence of the size of its economy,” Dr Farsin Yadegardjam, partner at COI Partners, tells Sifted.
A good number of investments have been dedicated to Swiss-based companies — particularly in the life science and medtech space — while Austria has offered fewer opportunities so far.
COI Partners is particularly excited by the large number of blockchain-focused companies in Switzerland which “have the potential to set new standards in how assets are exchanged between parties”, adds Yadegardjam.
“These are now moving beyond Series A stage and will likely soon reach relevant scale for us.”
Berlin and Munich remain interesting to the fund for consumer and enterprise technology investments.
COI Partners’ track record
- COI Partners has been investing in the DACH region for 21 years. It has 17 team members across offices in Berlin, Frankfurt and Zurich.
- The fund has made 110 investments and follow-on investments in its time, and 40 of its portfolio companies have exited.
- Its most notable investments include electronics rental unicorn Grover, gaming and esports-focused marketing agency Freaks 4U and automotive safety software company, TTTech.
- Its successful exits include glasses ecommerce brand Mister Spex, bike rental app NextBike and fast seafood restaurant NordSee — all German companies.
Plugging the growth capital gap
COI Partners says that the DACH region, just like elsewhere in Europe, still struggles with financing growth companies. For example, in Germany — which is home to many of Europe’s highest-valued growth companies — growth financing is at a record low at 1.1% of GDP in 2019 compared to 4% of GDP between 1950 and 1970, according to a report by VC firm Lakestar.
Almost all of the LPs in the new fund are from the DACH region — which COI Partners says is a positive sign that domestic investors are putting their “financial weight behind the development of (the region’s) tech industry”.
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But how will COI Partners compete with other growth funds focusing on Europe?
While Yadegardjam acknowledges that later-stage rounds in the region have typically been carried out by US and Asian investors, he thinks COI has an advantage over foreign funds as it has boots on the ground in the region.
“We believe there is real value in having your investor and board member 'next door' — in your city or at least in your country — versus having to cross different time zones and working cultures.”
Funds to provide more growth-stage financing for startups are desperately needed in the DACH region. In Germany, there are few domestic funds investing at the growth stage beyond Lakestar and Hotspring, which is a very different scenario to the US. With a local network and 21 years of experience investing in DACH companies, COI Partners knows its way around the region. It’ll be interesting to see what mark they can make on the ecosystems and how well it’ll compete with the increasing presence of late-stage US firms in Europe.
It’s also a good sign for DACH-based companies who are growing but don’t want to test the IPO waters while markets are down — this is one more resource for them to stay private longer.