September 13, 2022

Northzone raises €1bn fund to back European entrepreneurs

Sifted sat down with the Northzone partners to talk about FOMO, founders, debt and what on earth went on in 2021

Amy Lewin

5 min read

The Northzone partners

Northzone, the European VC firm, has raised a new €1bn fund — its largest to date, and one of the biggest raised in Europe this year.

The fresh capital will be used to do more of the same, backing startups from seed all the way up to IPO, writing cheques of $1m-40m.

The team says it sees 7,500 deals per year — which it believes is around 85 to 90% of the European market.


Northzone’s portfolio hall of fame includes Spotify, Personio, Hopin, Tier, Trustpilot and Klarna (although the fintech turned the firm down twice first). Recent investments have included grocery discounter Motatos and edtech Microverse

Sifted sat down with Northzone partners Jeppe Zink, Elena Pantazi and Kilian Pender to talk about FOMO, founders, debt and what on Earth went on in 2021. 

The heady days of 2021

“People got away with murder,” says Zink, referring to the investment frenzy that took place last summer. “Unit economics looked great, but if you really dug in and did a proper analysis… If there was any growth there, they would trust the growth.” 

“There was a bigger emphasis on growth,” adds Pender. “The pendulum has now swung back quite aggressively — VCs are saying we want to see more real metrics [like product market fit, and a clear path to profitability].” 

But Northzone, the pair tells Sifted, didn’t get caught up in the FOMO — or significantly increase its deal volume. “We always like to think we were perhaps more disciplined than the market generally,” says Zink.

People got away with murder

In 2021, Northzone invested in 26 new companies across all stages. This year, it’s made 13 new investments, many of which haven't been announced — more or less keeping pace with last year.

“Over the past 12-24 months we invested more at the seed rather than the Series A stage, because companies were raising at the A stage where they hadn’t really proven metrics that they might have done before,” says Pender. “So it didn’t make sense to invest at A when you can invest in the same company at seed [with about as much to go on].” 

“Everything got compressed,” says Zink. “Out of it came increased competition — and therefore the offering from VCs had to be better to the entrepreneurs.” 

The founder offering

Somewhat, as a result, Northzone now has a 11-person platform team, led by partner Elena Pantazi. That includes: two recruiters; Anna Skarborg, the new head of sustainability; people helping on marketing and brand; and legal and finance expertise. 

“The idea is to say, we’re here for you day-to-day with any needs you have,” says Pantazi. “And if we don’t have the expertise in-house, we definitely have the network to be able to connect you.” 


There’s also a network of 300 operators which Northzone can refer portfolio companies to. Some are on retainers. “One day you might want to have a quick chat on app optimisation, and one quick call solves the need. At other times it’s more strategic — I need mentorship for all my C-level people. How can I get the first connections?” Pantazi explains. 

And this isn’t just marketing, Zink insists: “We can’t win deals without Elena and what Elena’s team does, we can’t scale up without what they do.”. 

The platform team’s overarching KPI is the founder net promoter score (NPS) — ie, would a founder recommend Northzone to a fellow founder? Alongside that, they also track the number of operator introductions made, workshops held and mentorship relationships, to continually assess how much value the platform is bringing. 

“It’s not a volume game — but it gives you an indication of whether an intro was fruitful or not,” says Pantazi. 

Payments 2.0 and consumer behaviour mindshifts

As for sectors, the team is currently spending a fair bit of time on “payments 2.0” says Pender. There’s plenty of opportunity to better serve the payments needs of B2B marketplaces, he says — and the Stripes and Adyens of the world haven’t begun to tackle them. 

“A number of people from those businesses are actually leaving those businesses to set up new payments startups,” says Pender — a Stripe and Adyen “mafia” — and approaching investors like Northzone. 

On the climate front, Zink says “the market seems to be stuck around calculations, carbon trading etc, which is a short-term building block”. 

What it really needs, he adds, is something that would truly change consumer behaviour. “We’ve seen a bunch of the right startups, a couple where we think ‘Oof, that’s close’ but we haven’t gotten there yet.” 

Down on debt

Debt won’t be part of Northzone’s offering anytime soon though — despite its growing popularity in Europe. 

I really don't think [debt is] good news for European entrepreneurs

“I really don't think it's good news for European entrepreneurs,” says Zink. “I think if you were to run the statistics for early-stage businesses who take on debt, I think the evidence is so overwhelming over so many years that it’s bad news. 

“We saw it back 10 years ago, we saw it 20 years ago, and we saw the huge problems coming out of it."

“The only argument for it, if you do the maths, is that you buy yourself another 12 to 18 months time,” he adds. “And therefore, if you use that time to raise money at a much higher valuation, maybe you've got less dilution out that way. But what people often forget is that whatever money you raise, the repayment kicks in much earlier — so you think you're getting enough for two years additional runway, but because you got to repay the interest and you’ve got the covenants, the truth is, you're probably only buying yourself half the time you're thinking, and you're gonna now live with the bank. And when a company goes down, it's more often than not because that provider or bank pulls the plug, not the VC.” 

Debt aside, Zink’s pretty excited about how the next few years in European tech are shaping up. 

“Risk has come back into the game — and we are supposed to be risk takers — and I’m embracing that.” 

Amy Lewin

Amy Lewin is Sifted’s editor and cohost of Startup Europe — The Sifted Podcast , and writes Up Round, a weekly newsletter on VC. Follow her on X and LinkedIn