London-based Balderton Capital has amassed $1.3 billion to back European startups across two new funds, despite a challenging market.
The firm, which has backed companies including challenger bank Revolut and autonomous driving startup Wayve, raised $615 million for its ninth early-stage fund and $685 million for its second growth vehicle. The funds are of a similar size to their predecessors, which launched in 2021 with $600 million and $680 million, respectively.
The fundraises follow several mega-fund closes in Europe this year. Last month, Index Ventures secured $2.3 billion for its early- and growth-stage funds, while US firm Accel raised $650 million in May for a European early-stage vehicle.
Despite the large fund closes, European VC-backed fundraising has still been slow in 2024. At its current pace, the capital raised this year will likely match last year’s total, which was already significantly lower than that of the preceding four years. Fund count is likely to come in below 2023’s figure.
“It’s a challenging market,” Suranga Chandratillake, general partner at Balderton, said. “A lot of new funds and solo GPs raised [around 2021] and now they’re getting to the point of having to re-up. The second and third fundraise is where the majority of firms fail because it takes time to show that your strategy works. For firms like us, it’s fairly straightforward.”
Around 80% of the capital commitments to Balderton’s funds came from existing LPs, including British Patient Capital. The funds also drew in new LPs from Europe and the US, including one of the latter’s largest state pension funds, according to Chandratillake, who noted an increasing US presence in European VC funds.
“We’re seeing [US LPs’] attitudes toward Europe change,” Chandratillake added. “There’s data that shows over the last 10 or 15 years the returns in Europe have been similar, if not slightly better than the US. But smart LPs look not just at the fund and the firm but also the opportunity. When you have a major US LP saying that [Europe] reminds them of what they saw in California 15 years ago, you know that you’re creating something for investors to be excited about.”
Both funds will continue Balderton’s sector-agnostic approach. Chandratillake pointed to consumer marketplaces and enterprise software as areas of interest for the vehicles, as well as AI.
Balderton has backed several AI and machine learning startups in recent years, including generative AI-powered notetaking platform Supernormal and carbon data provider Sylvera. The firm will target application-focused AI startups rather than companies building infrastructure.
The funds will also focus exclusively on Europe, where Chandratillake is optimistic for the remainder of the year.
“We are seeing lots of activity and new company formations which is a good sign,” he said. “The European ecosystem for tech is nowhere near as big as it’s going to get and I think VC will continue to grow as an asset class. Things can change fast in venture but all indications suggest that it’s going to be a good year.”
Featured image of Suranga Chandratillake, general partner at Balderton Capital, by John Phillips/Getty Images
