Cambridge-headquartered deeptech VC firm IQ Capital has closed its fourth — and largest — venture fund at $200m.
Founded in 2007, IQ Capital has played an important role in deeptech investing in the UK, with total assets under management now north of $1bn.
Investors in the VC firm include institutional investors, family offices, corporations and tech entrepreneurs. The British Patient Capital — UK’s largest startup investor — is also an LP in IQ Capital.
IQ Capital told Sifted that its first fund — which was raised in 2007 and backed companies like adtech Grapeshot — has been returned with 3.5x returns.
How does IQ Capital invest?
IQ Capital invests at seed to Series A across Europe. Its average cheque size at seed stage tends to be around $2.5m, but that can go up to $5m in areas like hardware.
The fund will also do follow-on investments of up to $15m in “outperformers”, says cofounder and managing partner Kerry Baldwin, and can continue investing at later stages from its growth fund. “So we can support deeptech companies all the way through.”
The team are primarily interested in businesses with fundamental technologies at their core — like Paragraf, which is exploring ways to leverage the use of the incredibly versatile material graphene.
They invest across all areas of deeptech, including generative AI, advanced engineering, space tech, quantum computing, cybersecurity and synthetic biology.
“Strong technologies with a lot of IP. We are not looking at the trends. We are ahead of the trends,” Baldwin says.
What does IQ Capital invest in?
Its most notable investment is perhaps the London-based cloud banking startup Thought Machine, which it backed from seed to Series C. It last raised at a valuation of $2.7bn in 2022 and has over 35 global banks as clients.
IQ Capital was an early investor in the Cambridge University spinout Nyobolt, which is developing technology for ultra-fast battery charging. Speechmatics, another Cambridge spinout working on speech recognition tech, has been backed by the VC firm since seed stage.
According to Pitchbook data, 22 of the 90 companies it has funded are from Cambridge.
Plans for Fund IV
The deployment of the latest fund is already underway. Last week, IQ Capital led the £3m seed-stage fundraise for computing platform developer Signaloid. In February this year, IQ Capital participated in the £21bn Series B for the Cambridge University spinout Risilience, which models climate change risks.
“We look at strong algorithms. What are the disruptive algorithms that are going to power the markets in the future? We spend a lot of time with large corporates, understanding their problems and what will be their problems in the future,” says Baldwin.
Many of the problems that corporations are looking to solve for the future revolve around the energy sector — pathways to cutting emissions, making progress on net-zero targets and using new materials to cut environmental impact.