As the European tech scene continues to grow and become increasingly ambitious, investors are looking for ways to double down on their existing investments at Series B and beyond. MMC Ventures, a London-based venture capital firm that typically invests in seed and Series A rounds through various funds it manages, has launched a new £100 million ‘Scale Up’ fund to provide expansion capital to its later-stage portfolio companies.
This move is part of a larger trend among early-stage European VCs to launch funds focused on supporting their existing portfolio companies as they scale. LocalGlobewith its ‘Latitude’ fund is another example of this trend.
The Need for Later-Stage Capital
As European tech continues to grow and become more global, investors don’t want to get diluted too early and lose control over their investments. Meanwhile, while there may be an abundance of early-stage capital available, there are fewer European funds as you move into later stages.
MMC Ventures’ Scale Up Fund will provide primary capital to current portfolio companies that have grown beyond the mandate of MMC’s existing funds. Notably, however, the fund is also permitted to participate in secondary transactions, allowing MMC to offer liquidity to early MMC and third-party investors who want to exit from one of its portfolio companies early.
Recycling Capital within the Ecosystem
This approach enables capital to be recycled within the early-stage funding ecosystem. For example, angel investors can use the funds they receive from exiting an investment in a later-stage company to back newly formed startups. This not only benefits MMC’s investors but also helps maintain a longer-term outlook for the fund.
MMC’s Core Specialism Remains at Series A
Despite launching a later-stage fund, MMC’s core specialism remains as a Series A investor. The firm has already made investments from the Scale Up Fund into several portfolio companies, including Safeguard Global (alongside Accel-KKR), Masabi (alongside Smedvig Capital), and Interactive Investor.
MMC’s Recent Growth and Expansion
The launch of the Scale Up Fund rounds off a number of new funds managed by MMC. The firm recently outeda new £52 million seed fund in partnership with the mayor of London, and combined with its annual EIS fundraise, MMC has added £200 million to its coffers in the last 12 months.
Over the last year, MMC has invested more than £85 million across the pre-seed, seed, series A, and later stages, with investments ranging from £100,000 to £25 million. The firm also moved into new larger offices in Holborn, Central London, which Macfarlane sees as a sign of how bullish MMC remains regarding U.K. tech despite Brexit.
A Significant Innovation in the U.K. Venture Market
The launch of the Scale Up Fund represents a significant innovation in the U.K. venture market. "2019 has been a big year for our firm, and the launch of our new Scale Up Fund represents a scale-up moment for MMC as well as a significant innovation in the U.K. venture market," says Macfarlane.
"This fund allows us to double down on our most successful businesses while enabling our investors, and others, to take full or partial exits from early investments."
Conclusion
MMC Ventures’ launch of the £100 million ‘Scale Up’ fund is a significant move for the London-based VC firm. As European tech continues to grow and become more global, MMC’s focus on supporting its existing portfolio companies as they scale is a welcome development.
By providing expansion capital to later-stage companies, MMC is helping to create a more sustainable ecosystem for startups in Europe. The launch of the Scale Up Fund is also a testament to MMC’s commitment to innovation and its willingness to adapt to changing market conditions.
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About the Author
The author of this article is a journalist with a focus on venture capital and startup funding. They have written extensively on the topic and have a deep understanding of the European tech scene.
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