British venture firm Albion Capital has raised nearly $100 million for its portfolio companies.
According to a UK Tech News report Wednesday (April 12), the money arrived a little more than a year after the company said it was looking for financing, and comes at a time when many venture capital (VC) operations are struggling to land funding.
The report said Albion will deploy the funds — 80 million pounds, or $99.8 million — across its portfolio of six venture capital trusts (VCTs). The company invests mainly in software and healthcare and health tech firms, and holds $736 million in assets.
“VCTs play an important role bringing British innovation to life and supporting entrepreneurs on their growth journey,” said Will Fraser-Allen, Albion’s lead investor. “This results in positive economic and social benefits for the UK and valuable returns for patient VCT investors.”
He cited the recent success of Quantexa, a data firm in the Albion portfolio, which achieved unicorn status this month after raising 104 million pounds in a Series E round.
“Given the ongoing global economic and geopolitical challenges, we believe that the funding provided by VCTs is more important than ever and this well supported fundraise makes it possible to continue backing talented entrepreneurs to accelerate growth,” Fraser-Allen added.
The company’s announcement comes amid a host of recent news coverage about the challenges facing VC firms.
For example, a report Wednesday by the Financial Times notes that VC giants like Tiger Global and Andreessen Horowitz have begun visiting the Middle East to seek financing from sovereign wealth funds who are looking to diversify their economy.
“We came to San Francisco looking for them in 2017,” Ibrahim Ajami, head of ventures at Mubadala Capital, a $6 billion offshoot of the sovereign wealth fund in Abu Dhabi, told the Financial Times. “Now … everyone is coming to [us]. The tech correction has humbled the industry.”
The correction also caused funding for U.S. tech startups to plummet 55% during the first quarter of the year, with VC firms reducing the number of investments they’re making and the size of those deals.
“The whole market is taking much more caution toward investment,” said Kyle Stanford, a Pitchbook venture capital analyst. “It’s not going to be easy for companies to raise capital even if they’re growing at a pace they set in their last round.”
As PYMNTS has written, this difficult environment put more focus on belt-tightening, which has pushed FinTechs to shift from growth to profitability.
It’s a move some companies are using to woo investors, although Zeynep Yavuz, FinTech partner at early-stage VC firm General Catalyst, took an opposite view.
“I don’t think any venture investor wants profitability,” Yavuz, whose firm has backed fast-growing companies like Stripe, Airbnb and Instacart, told PYMNTS. “The quality of the business model, the scale needed to generate positive contribution margins and gross profit margins — that’s what investors really care about now.”
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