A huge reup from returning LPs has seen Finch Capital strike a first close for its €150m-targeting third fund aimed at European FinTech and AI startups.
The firm said Europe III has seen a near 90% follow on investment from previous funds to bring it to the €85m first close.
Since its launch in 2013 Finch has made 40 investments across Europe and Asia, and its assets now total $400m.
Finch managing director Radboud Vlaar said, “We have always been bullish on investing in financial technology.
“Moving forward, we are doubling down on financial software, especially those companies that leverage AI to this end.
“We have seen the industry mature, giving rise now to a rich but fragmented landscape of robust businesses with €2 to €5m in revenues.
“These are the companies we are focused on working with now. With the right support and management they have great risk/return outcomes and they are ready to build leading positions and consolidate the European market.”
Finch’s €110m Fund II from 2017 invested in both SE Asian and European startups, and followed a €40m debut vehicle launched in 2014.
The firm said its new, larger European fund would allow its to invest €2 to €10m at Series A and B stages, acquiring significant minority stakes in startups with €2m to €5m of revenue – a segment it says is currently hit by a European VC and growth market funding gap.
Finch plans to back 15 to 20 European startups, targeting liquidity 3 to 5 years post investment, over the fund’s three year initial investment lifespan.
Previous investments include Trussle, Fourthline, Goodlord, Grab, Hiber, BUX, Twisto, and Zopa, and exits include Salviol and Cermati, with two exits in process.
Former Google and DeepMind AI specialist Steve Crossan, who Finch hired as a venture partner early last year, said, “Europe is ready to compete in the global enterprise tech arena, with more capital being deployed in AI/deeptech than any other industry – $20bn last year alone.
“In the wake of general performance pressure, we see acceleration of the finance sector in their tech understanding and adoption creating pressure for additional innovation in these areas.”
The firm also launched its €50m Finch Capital SEA II fund last year, targeting investments in SE Asia.
That fund is set to hold a first close in the coming months, in the wake of announcing investment partnerships with Arise and a South East Asian Bank.