Global Founders Capital, the Berlin-based early-stage VC firm with close ties to German startup Rocket Internet, will become the venture arm of Rocket Internet.
The VC has previously launched two $1 billion funds, and just a few years ago his name was appearing in dozens of deals per year. But then it became quieter. Now we know why: In the future, investments will only be made from Rocket Internet’s balance sheet.
Last year, the Financial Times reported that Global Founders Capital was in the midst of a major strategic shift. A few weeks ago, the VC firm reached out to TechCrunch to confirm the pivot and discuss the reasons behind the postponement.
“To be transparent, there have been some changes at Global Founders Capital over the last few years – in terms of the structure of the fund and the composition of the team,” Global Founders Capital partner David Sainteff (pictured above) told us.
Sainteff said the firm decided it was not the right time to launch another fund because it was not a good time to invest as it did not believe there were that many good opportunities that met the firm’s criteria. and that it does not need more capital to remain competitive against other deal investors.
Global Founders Capital was originally structured as a traditional VC firm with multiple limited partners involved in funds. With its first fund, it supported future unicorns such as Personio, Revolut and SumUp. With its second fund, the firm invested in several companies also covered by TechCrunch, including Pennylane, Ankorstore and Seyna.
Before joining Global Founders Capital seven years ago, Sainteff worked for Rocket Internet was an investor at Global Founders Capital from the beginning. So there was a close bond between them from the start.
“Following the deployment of this second fund, we have decided not to raise another fund. Instead, we will leverage Rocket Internet’s capital,” he confirmed. “We have 300 million euros on our balance sheet that we can make available for venture investments. We don’t have any fundraisers planned.”
To be honest, this is a bit strange since the company’s performance so far seems to be quite good. According to Sainteff, the first fund will generate returns between 3x and 4x. “It is far too early for the second fund [to say],” he continued. “But we have some clear winners like Pennylane. We entered in the pre-seed phase and the company is worth over 1 billion euros.”
The new strategy means that Global Founders Capital is now much smaller than it used to be, with only five partners remaining: Fabricio Pettena, Don Stalter, Cedric Asselman, Sainteff and of course Rocket Internet co-founder and CEO Oliver Samwer.
The new version of the company will also focus only on early-stage investments, with additional opportunity for follow-on investments in later rounds (Series A, B, C, etc.).
Did Global Founders Capital choose not to launch a third fund because it did not receive enough support from potential limited partners or because of a recent downturn in technology compared to 2021 (excluding the boom in artificial intelligence)? The decision probably depended on both.
“It wasn’t the best time to raise funds [limited partners]”, Sainteff told us. “We believe the need to provide capital has been difficult.”
“It’s an easy decision when you have €300 million in the bank,” he added. “If other VC firms were in the same boat, they would have made the same decision. We do not rule out the possibility of raising a fund if conditions are right and favorable.”
For now, the realignment reverses much of the fund’s previous expansion, when it expanded into additional geographies, technology areas and funding stages, and the Global Founders Capital name was attached to a number of deals.