Three partners from German investor Earlybird are launching a new VC firm dedicated to deeptech university spinouts.
U2V (University 2 Venture) has achieved a first close for its first fund with a final target of €60m. U2V said the amount closed is in “the strong double-digit millions” but declined to provide a specific number. The firm says it hopes to reach its final target “within the next few months.”
German material handling provider Jungheinrich is an anchor LP in the fund, and is joined by family offices, founders and industrial players.
The fund will invest in up to 25 European deeptech startups at pre-seed and seed stages with average tickets of €1m. It will focus on AI and computing technologies like semiconductors, as well as industrial startups and clean tech.
U2V was launched by Philipp Semmer, Michael Schmitt and Johannes Triebs, who are partners at Earlybird X, a €75m fund launched in 2021 to back university spinouts. They are joined at U2V by fellow Earlybird X investor Moritz von Klot.
Portfolio companies of Earlybird X include German quantum sensing startup Quantum Diamonds and carbon capture company Greenlyte.
Following a reorganisation, last year Earlybird X was integrated into Earlybird’s wider early-stage strategy.
“We have had a focus on deeptech investments and university spinouts from the very beginning and we continue to do so with our new fund,” says Semmer. “We decided to do this on a green field without the restrictions we had in such a large group [as Earlybird] made of various different funds.”
U2V is “completely independent of Earlybird” added Semmer. The firm’s three founders, however, will remain partners in a reduced capacity at Earlybird, where they will continue to manage Earlybird X’s portfolio companies. Von Klot will also remain at Earlybird.
Earlybird X is now fully invested and no new investments will be made out of the fund, according to the founders.
Investing in spinouts
U2V plans to identify promising teams in Europe’s technical universities who are working on turning research projects into deeptech businesses.
“We believe these ecosystems are becoming more and more professional,” says Trieb, pointing to growing efforts from universities to foster entrepreneurship within their ranks, from coaching and dedicated lectures to setting up tech transfer offices. “We see a market opportunity from a VC perspective”.
A number of VC firms in Europe have a similar thesis, such as UK-based IQ Capital Partners, but overall the market is “not too crowded,” adds Semmer. “You really have to go the extra mile to find the best teams in universities,” he says. “The full potential is not really seen by everybody.”
To find top talent, U2V is building partnerships with tech transfer offices in top technical universities across Europe, including the universities of Oxford and Cambridge, École Polytechnique in Paris, ETH Zurich and TU Munich.
The firm currently has teams in London, Berlin and Aachen.
At the same time the firm’s founders say they have a network of hundreds of corporate partners across various industries they can leverage to attract and support future portfolio companies.
“We have a strong corporate network, we can connect startups with potential customers in all kinds of industries, so they find earlier and better product-market fit and more traction,” says Trieb. “This also converts into higher chances for follow-on financing.”
