Venture fund Digital Horizon today launched its second venture fund with a target volume of $200 million. The first fund, which opened in 2019, is completing the investment stage and has so far returned 40 per cent annually to investors, the company said. Its portfolio contains more than 20 companies including Klarna, team management platform Monday.com, data streaming platform Ably, retail analytics platform Trax and Insurtech companies Cuvva and Obligo.
Like the first fund, this new one focuses on fintech and corporate software, which the company said are some of the fastest growing segments in venture capital. Fintech venture investment volume in 1Q21 was $98 billion, more than double 2020’s first quarter. Gartner forecasts corporate software spending to grow by $70 billion next year to $699 billion
Digital Horizon will adopt a multi-stage approach and invest in companies at all stages of the startup cycle, it said. This approach has generated high returns over a long period of time with the first fund. They are also focused on startups founded by “passionate immigrant entrepreneurs with a clear vision and strategy”. In 70 per cent of Digital Horizon’s startup investments, the founders were building their business not in the country of origin.
“We are delighted to launch our second fund, following an oversubscribed first fund,” said Alan Vaksman, founder and managing partner of Digital Horizon. “In our first fund we moved away from the traditional venture approach and invested in companies at various stages from Round A to D.
“Investing in early stage startups can mean double-digit multiples, but this is ‘long’ money, locked in for seven or more years. In later stage investments, the return on investment occurs in just one or two years, but growth slows to an average of two to four x. A multi-stage fund provides high returns while enabling the investors shorter investment horizon and liquidity. Our new fund will adopt the same approach”.