Global founders’ capitala Berlin-based early-stage VC firm with close ties to German startup factory Rocket Internet will turn out to be the enterprise arm of Rocket Internet.
The VC had previously raised two $1 billion funds, and just a few years ago his name was featured in dozens of deals a yr. But then the situation calmed down. Now we know why: in the future, the company will invest exclusively from Rocket Internet’s balance sheet.
Last yr Financial Times. announced that Global Founders Capital is in the midst of a major strategic change. A few weeks ago, the VC firm reached out to TechCrunch to verify the pivot and discuss the reasoning behind the change.
“To be transparent, there have been quite a few changes at Global Founders Capital in recent years – in terms of fund structure and team composition,” Global Founders Capital partner David Sainteff (pictured above) told us.
Sainteff said the company has decided it is not the right time to lift one other fund because it is not a good time to take a position because it does not consider there are many good opportunities that meet the company’s criteria and that it does not need more capital to retain competing against other investors to shut a deal.
Global Founders Capital was originally structured as a traditional VC firm with several limited partners participating in the funds. With its first fund, it supported future unicorns akin to Personio, Revolut and SumUp. With the second fund, the company invested in several firms covered by TechCrunch, akin to Pennylane, Ankorstore and Seyna.
Before joining Global Founders Capital seven years ago, Sainteff worked for Rocket Internet, which he was an investor in Global Founders Capital from the starting. Therefore, there was a close bond between them from the very starting.
“After launching the second fund, we decided not to raise another one. Instead, we will use Rocket Internet’s capital,” he confirmed. “We have EUR 300 million on our balance sheet to use for venture investments. We are not planning any collections.”
Honestly, this is a bit strange because the company’s performance so far seems quite good. According to Sainteff, the first fund will generate returns of 3x to 4x. “For the second fund, it is definitely too early [to say],” he continued. “But we have some clear winners like Pennylane. We’ve entered the pre-seed stage and the company is value over €1 billion.”
The new strategy signifies that Global Founders Capital is now much smaller than it was, with only five partners left: 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 exclusively on early-stage investments, in addition to opportunities for further investments in later rounds (Series A, B, C, etc.).
Has Global Founders Capital decided not to lift a third fund because it didn’t receive sufficient support from potential limited partners or because of the current technology downturn in comparison with 2021 (except for the AI boom)? The decision probably depended on each aspects.
“It wasn’t the best time to raise funds [limited partners]”Sainteff told us. “We think it was difficult to make the capital commitment necessary.”
“It’s easy to make a decision when you have EUR 300 million in the bank,” he added. “If other VC firms were in the same boat, they would make the same decision. We do not rule out the possibility of obtaining a fund if the conditions are favorable.”
For now, the pivot is reversing much of the fund’s earlier expansion, because it expanded into more geographies, technology areas and financing stages and added the Global Founders Capital name to a number of deals.