Berlin-based Earlybird closes $100M Fund IV

Investor in Crowdpark, Carpooling, B2X Care targets $200M fund size

Despite a slowdown in venture capital fundraising in Europe, one venture firm is bucking the trend.

Earlybird Venture Capital, based in Berlin, Germany, announced Tuesday that it's had a first close of $100 million, out of a target $200 million venture fund. This will be the fourth fund since the venture outfit was founded in 1997, and it brings the total amount under management to $700 million.

Since inception, Earlybird has invested in 70 portfolio companies, of which seven had IPO exits, including Interhyp, Tipp24, Wilex, Esmertec, Entelos, and NoemaLife and 16 have had M&A exits, leaving about 26 active companies in its portfolio.

Earlybird's last fund, Fund III, has 20 active portfolio companies, of which a few are doing more than $30 million to $40 million in revenue and a couple generating more than $100 million, including B2X Care. Some other companies in its portfolio gaining traction, include Crowdpark, a social betting site, Carpooling, a peer-to-peer ride-sharing service, as well as Peak Games, Smava and Socilbakers. Fund III has already seen some exits, including  Scoreloop and Myriad.

With traction in its current and past funds, the partners see a significant return for their investors. Indeed, all the investors in Fund III are back in Fund IV, with the addition of a couple more, said Jason Whitmire, a partner at Earlybird Venture Capital, in an interview with me. He expects a second round close in the next three months. 

Earlybird focuses primarily on the tech sector. Of the 27 start-ups in its Fund 3, about 25% are consumer Internet. The team also focuses on enteprirse services, analytics and mobile.  The fund is also focused primarily on Europe, specifically Germany, Switzerland and Austria. The combined markets for those countries is equivalent to 30% of the U.S GDP (gross domestic product), said Whitmire. Yet there are only four major venture players that can raise $100-plus million funds, he added. In the U.S., there are 160 VCs that can raise that kind of capital.

The European opportunity

To this end, Earlybird can be selective, given the limited number of competitors. Additionally, fundraising has slowed down in Europe of late.  VCs put $4.4 billion euros into just over 1,000 deals for European companies in 2011, down 14% in investments and down 19% in deals, according to Dow Jones VentureSource. It's the lowest annual deal amount since VentureSource began tracking the area in 2000. 

Additionally, there has been a growing disequilibrium in the amount of deals vs venture funding. 

(Source: Earlybird Venture Capital)

(source: Earlybird Venture Capital)

Additionally, Europe has some amazing start-ups that are successfully innovating in areas like music, such as Spotify and Berlin-based SoundCloud, which has raised some $60 million in funding.

Whitmire also expects a number of IPOs in the near future from start-ups such as Spotify as well as one of his own portfolio companies, B2XCare, which he says will be generating several hundred million dollars a year.  

(Image source: think.stewards.edu)