London-based consumer VC firm Felix Capital has raised a new $600m fund to back digital lifestyle products and brands. It’s the fourth fund from Felix — coming two and a half years after its third — and doubles the firm's assets under management to $1.2bn.
Where will the money be spent?
- Felix plans to invest between $5m and $10m in up to 25 companies, mostly at Series A, in Europe and North America over the next couple of years.
- Half of the fund will be invested into growth-stage startups, both in new and follow-on rounds.
- Two thirds will go to consumer-focused startups and the rest to the companies providing tools to support them.
- Particular focuses will be on Web3 and sustainable lifestyle startups.
Who’s Felix invested in the past?
- It backed and exited the likes of first-generation European consumer tech success stories Deliveroo and Farfetch.
- The firm also counts NFT trading card game Sorare, takeaway delivery startup HungryPanda and escooter startup Dott among its portfolio.
- But Felix has also made a number of smart bets on B2B companies that enable B2C businesses, like marketplace SaaS Mirakl, anti-fraud platform Forter and Amazon aggregator SellerX.
- So far this year, it’s backed US-based Web3 platform Lightspeed, Swedish pet tech Lassie and Spain’s business travel solution Travelperk.
What’s the consumer market looking like?
The fundraise comes on the back of pandemic-driven digitalisation that’s seen consumers turn increasingly to digital products and solutions in their everyday lives.
It’s a shift that’s not gone unnoticed among the VC community, and in 2021 investors pumped $48bn into consumer startups — three times as much as the year before — according to Dealroom data.
But the future's looking less certain, with an economic downturn looming on the horizon, and it's widely predicted that investor cash will be far harder to come by than it has been for the past couple of years.
Consumer startups are already feeling the pinch, with companies like secondhand car marketplace Cazoo, e-learning platform Domestika and a number of speedy delivery startups all laying off staff in the past two weeks. Many others have also begun making cutbacks to extend their runway as consumers and investors tighten their purse strings.
Since launching in 2015, Felix Capital has built up a track record of investing in some of Europe’s most successful consumer-focused businesses, and clearly the firm’s LPs back it to continue making the right bets during a more difficult economic environment.
Its thematic focus — as opposed to stage or geographical — on brand and community-focused digital lifestyle businesses could mean it's better placed to pick the winners in the sector than more generalist funds.
It'll also be interesting to see what future European consumer winners emerge from the Felix portfolio; while European tech was originally known for consumer tech successes (think Spotify and Skype), the number of VC-backed B2B unicorns overtook that of consumer unicorns for the first time in 2020.