Draper Esprit and Earlybird tie-up amounts to a €1.3bn super-fund

4 Jul 2018

Image: Nagy-Bagoly Arpad/Shutterstock

As questions swirl over European investment funds, the formation of a partnership between Draper Esprit and Earlybird couldn’t come at a better time for the region’s start-ups.

A new partnership between Dublin and London-listed Draper Esprit and Berlin-based Earlybird is, in effect, the equivalent of a €1.3bn-plus super-fund for European emerging tech start-ups.

News of the partnership has prompted speculation that a merger between the two companies is likely.

‘We share the same belief that European entrepreneurs have the ability to build significant global businesses of the future’

The partnership is expected to deploy up to €200m in seed-stage companies as well as those on series A, B and C rounds.

Large pools of capital can do a lot more

The goal of the partnership is to make 20 to 25 new deals a year by combining various pools of capital into the equivalent of a €1.3bn-plus pool of venture capital and a combined portfolio of more than 100 high-growth companies across Europe, making it one of the continent’s largest super-funds.

“We have known the team at Draper Esprit for many years and we share the same belief that European entrepreneurs have the ability to build significant global businesses of the future,” Earlybird said in a statement.

“In our opinion, this can only be reached through a competitive access to funding provided by respectively large pools of capital that enable investments across all development stages of a company. Driven by this fact, two very complementary partners decided to build a strong partnership based on trust and our aspiration to help promising tech start-ups in Europe with excellent teams and highly scalable business models by sharing deal flow, investment resources, expertise to co-invest and providing globally competitive amounts of capital.

“Nevertheless, our Earlybird Digital West and the Draper Esprit team will continue to manage their respective funds and portfolios independently.”

Draper Esprit, a subsidiary of the $9bn Draper Fisher Jurvetson venture capital syndicate, conducted a £100m initial public offering (IPO) on the Dublin and London stock exchanges in 2016, led by Irishman Brian Caulfield, a venture partner with the firm. The company is a major investor in breakout European tech firms, including TransferWise, Trustpilot and Graphcore.

Earlybird has more than €850m under management and has been instrumental in seven IPOs and 22 trade sales.

This week, it emerged that Earlybird closed its €175m Digital West fund, which focuses on deep-tech start-ups in German-speaking countries, the Nordics, the UK, Benelux France and southern Europe, bringing the total capital under management at Earlybird to close to €1bn.

Investments by Earlybird include N26, UiPath, Smava and Peak Games.

The teaming up of the two companies couldn’t come at a better time for European start-ups.

For example, in Ireland, the start-up investment market is on the verge of falling over a cliff as existing seed funds mature. In its recently analysis of investment in Irish tech, the Irish Venture Capital Association warned that a lack of capital in Europe was exacerbating the problem.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years