The French investment group’s $1.18bn growth portfolio includes digital healthtech Doctolib and Spanish delivery company Glovo
French investment group Eurazeo has closed a new growth fund worth over €1.6bn ($1.88bn), another indication of the growing strength of Europe’s growth equity market.
The fund is Eurazeo’s third growth vehicle since the firm started a growth strategy in 2014. The growth team invests in companies from Series C onwards with initial investments of €25-100m ($29.42-117.68m) and the potential for follow on. Most of the investments are in Europe across B2B SaaS, digital health, cybersecurity, infrastructure software, fintech and marketplaces.
The firm’s €1bn ($1.18bn) growth portfolio includes European unicorns such as digital healthtech Doctolib and Spanish delivery company Glovo.
Instead of trying to find a way to exit, find a buyer or reach profitability, European tech companies are deciding to raise more money from investors to invest more in the business, grow, launch new products and grow in new geographies. Not all of them want to be global but all of them want to be a very big business in a vast territory, says Yann du Rusquec, partner at Eurazeo Growth.
There has clearly been a change in the ambition of entrepreneurs. The firm had already deployed more than half of the fund, he added.
Eurazeo is one of a small group of publicly-traded European private equity and VC firms that includes Bridgepoint, EQT, Partners Group, Forward Partners and Draper Esprit. The company manages €15bn ($17.65bn) in private equity assets across buyout, venture and growth strategies.
The Eurazeo growth team has already seen several high profile exits, including Farfetch; it sold all of its shares in the online fashion marketplace in 2020, netting €90.4m ($106.39m), equal to 4.1x return cash-on-cash on the original investment.
Another Eurazeo growth portfolio company, Swedish fintech Tink, announced an agreement for €1.8bn ($2.12bn) acquisition by Visa in June, just a half year after Eurzeo had invested. If completed, the deal would be the third-largest acquisition of a European VC-backed fintech.
Du Rusquec says that European growth equity is not a mature market and that more exits and IPOs from European startups will help take the continent’s growth equity to the next level, on par with the US.
There is already a strong pipeline of European tech companies looking to list, though many successful European tech companies have chosen to list in the US, such as UK-based healthtech giant Babylon (via a SPAC) and UiPath. Du Rusquec says that investors need to tempt European companies with strong European footprints to go public in the region.
When they have the choice between the US or Europe, we just need to convince them that they will get the same valuation and the same high-quality investors by being listed in Europe. That’s what we have to build in the coming years, he says.