VC company DN Capital started its fifth fund in the best way possible.
In April 2020, the company made its first investment from the vehicle into Vienna-based edtech startup GoStudent. A little more than a year later, GoStudent was a unicorn.
The fact that the fund had a unicorn investment before it had even officially closed (the final close was today) speaks volumes about European tech right now. “We’re just starting to see massive companies coming out of Europe and it’s quite exciting,” says Nenad Marovac, managing partner of DN Capital.
The VC — best known for its investments in Auto1 and Shazam — says that it was aiming to raise €200m for the fifth fund, but was overwhelmed by a “tidal wave” of LP interest and closed at €300m. It’s already deployed about a third of the capital and given the success of GoStudent, is valued at over 3x cash invested, Marovac says.
DN Capital’s announcement brings the total raised by European VCs this year to €8.6bn amid a surge of LP interest in European tech as the region shows it can create tech successes on par with other global tech ecosystems. Other notable fund closes include Accel’s close of a $650m early-stage fund covering Europe and Israel in June; podcaster-VC Harry Stebbings’s two funds totalling $140m; and a $200m seed fund raised by Index.
Are we in 1999?
Marovac says that the firm is not fazed by a surge of US investor interest in European VC given that DN Capital is an earlier-stage investor.
“We do mostly series A and quite a bit of seed. We like to partner with a lot of these US firms” including Bessemer and Sequoia, he says. “We’ll continue to work with them.”
The newest fund will be used to invest mainly in software, fintech, marketplaces and the consumer internet. DN Capital has made about two-thirds of its investments in Europe to date and the rest in North America and manages a total of $850m across all its funds. DN’s last fund, closed in 2018, was €200m.
DN Capital’s current portfolio includes Spain’s Jobandtalent, which raised €100m from Softbank earlier this year. The company’s exits in Europe include Shazam, which sold to Apple in 2018, and German online used car dealer Auto1, which raised nearly €2bn earlier this year in a public listing.
“Are we in 1999? I don’t think so because I think there are real revenues and real traction in these companies. Is the market hot? Yes, it’s hot,” says Marovac.