In a first for Europe, Passion Capital will crowd-fund part of its new $62M fund from retail investors – TechCrunch

Passion CapitalOne of Britain’s first early-stage chancellors Mob fund Passion Capital Fund III, the last phase of its latest £ 45m fund ($ 62.5m). TechCrunch understands that this is the first time retail investors have been invited to become LPs in VC funds, at least in Europe.

Passion says it will use it seed The platform, commonly used by startups for crowd-equity financing campaigns. This move is a very unusual one for a VC, where LPs are usually drawn from pension funds and family offices rather than as ‘individuals on the road’.

Seeders were previously used Seedcamp The venture accelerator in the UK allows its founders to participate in fund raising, but it was privately allocated. What is different about Passion’s move is that almost anyone can become an LP in their new fund, even if it is very small.

The allocation of £ 350,000 will be made available to the public. This proposal may well testify to retail investors as their single investment will be implemented in a range of startups rather than direct single company investments traditionally made through seeders.

Any investor who certifies himself as ‘high net worth’ or ‘sophisticated’ will be able to invest in the fund. Passion Capital’s portfolio of 83 tech investments is estimated at £ 5 billion and includes Monzo, GoCardless, Butternut Box, Adzuna and Marshmallow.

Passion says it has already made 11 new investments from Fund III, which investors will automatically become a part of through the Cedars platform, with plans for 15-20 new investments ahead.

Alison Burbidge, Passion Capital Partner, said in a statement, “Investing in a private venture fund is usually reserved for institutions. We are opening our doors to a much wider range of investors in this unique collaboration with Cedars as we seek to diversify our investor base and expand reach for investors who are interested in partnering with us. “

Jeff Kelisky, CEO of Cedars, said: “This is a very innovative collaboration for both the venture capital and equity crowdfunding space … It presents our community with another avenue to participate in SME Equity Finance Which saves additional investment opportunities and extraordinary potential. Beyond returns, direct investment campaigns, we also run. “

Speaking to me in an interview, Berbij said: “We were watching what was happening in the states, along with Anglist Rolling Fund And then the SEC expanded the definition of qualified investors, and, basically, this democratization of retail investors eventually gained access to venture funds and GPs. It is a pity, where institutional investors choose these age-old fund managers, and where the whole notion is that it has been an elite, inaccessible asset class for retail investors.

Burbidge said he talked to the Angellists about doing something similar in Europe and felt it was not legally possible right now, so he asked Seeders, who confirmed they could do so.

“We closed the first fund in August 2019, it was 25 million, then another 20 on August 20, so 45 million, which is the same size as our second fund. And during the epidemic. “But, she says, after dealing with her LP, she eventually found that she had an allocation of £ 350,000 left, so it became the germination of the crowdfunding idea.

“I thought, we got 350,000 left, why don’t we crowdfund it. This whole drive for retail investors to access and invest in venture funds – to get that exposure for the entire portfolio – I think. This is a really good thing. I think it’s great for everyone involved. Obviously, as long as they are educated and they know that capital is at risk and this pensioners are not putting their final savings in Are, and those common types of warnings about crowdfunding. But I like the idea of ​​people coming into contact with the technology, and not to do £ 150,000 as a minimum check. “

Although Burbidge declined to comment further on the subject, it certainly meant that this allocation could be increased if crowdfunding stopped.

He said: “There is no retail investor in the world who would not want access to the latest Sequoia Fund, or Excel Fund Correct or Andreessen Horowitz Funds … We think it is great to risk retail investors in a portfolio.” I think it would be great if there was more money.

Burbidge believes that actions like Passion Desire “increase the diversity of the LP base. It enhances inclusion and gives people greater access. It just creates more participation and breaks down the old barriers. We have Seedrs will be the platform for Q and A. It depends on us how much we want to connect with that community, as does Monzo with its crowdfund investors. Monzo organizes a public event every year for all of its crowdfund investors Does. I would love to do an event… It would be great to meet people who invest in this fashion. “