Isomer Capital, the London-based fund-of-funds which has backed VC firms like Hoxton Ventures, Seedcamp, Kindred, Future Positive Capital, Entrepreneur First and Hardware Club, is now stepping further into the VC side of the market. It’s raised a €100m ‘opportunities’ fund to invest in growth-stage startups from its VC funds’ portfolios, alongside those VCs. The company already coinvests at earlier stages out of its main fund-of-funds. Opportunities and ‘breakout’ funds have become popular with VCs lately — Dawn Capital, LocalGlobe and Index all have them — as a way to continue backing startups from their portfolios as they scale, and to get in on deals they missed the first-time round. They’re less common with LPs; Isomer thinks it’s the first fund of fund in Europe to make this move. But arguably, it makes even more sense for LPs to get into this game, given how much insight they have into VC portfolios. Isomer has invested in 32 early-stage VC firms across Europe, giving it an underlying portfolio of 970 startups. Some of them are already big successes — like Cazoo, Darktrace and Deliveroo — while others could be soon, especially if fundraising is made even easier for them.
Isomer also wants to help those companies make it to their next rounds more easily which, in today’s heated market, often means providing them with a little more capital between ‘official’ rounds. The sweet spot is companies with €10m in annual revenue raising at a €200-250m pre-money valuation. Plenty in the portfolio have already reached a valuation far higher than that, which puts them out of the picture. About 25% of our fund-of-fund investors are big Japanese corporates who may be interested in investing and doing partnerships.