Global Founders Capitalthe Berlin-based VC firm with close ties to German startup factory Rocket Internet is set to become Rocket Internet’s business arm.
The VC previously raised two $1 billion funds and, just a few years ago, its name appeared on dozens of deals a year. But then things calmed down. Now we know why: From now on, he will invest exclusively from Rocket Internet’s balance sheet.
Last year it Financial Times reported that Global Founders Capital was in the midst of a major strategic shift. A few weeks ago, the VC firm reached out to TechCrunch to confirm the pivot and discuss the reasons behind the shift.
“To be transparent, there have been quite a few changes at Global Founders Capital over the past few years — in terms of fund structure and team composition,” Global Founders Capital partner David Sainteff (pictured above) told us.
Sainteff said the company decided it wasn’t the right time to raise any more capital because it’s not a good time to invest, as they don’t think there are that many good opportunities that meet the company’s criteria and don’t need more capital to stick around competing against other investors for deals.
Global Founders Capital was originally structured as a traditional VC firm with several limited partners participating in capital. With its first fund, it backed then-future unicorns like Personio, Revolut and SumUp. With its second round, the company invested in several companies TechCrunch has also covered, including Pennylane, Ankorstore, and Seyna.
Prior to joining Global Founders Capital seven years ago, Sainteff worked for Rocket Internet which was an early investor in Global Founders Capital. So there were close ties between them from the beginning.
“After developing this second fund, we decided not to raise another fund. Instead, we will use Rocket Internet’s capital,” he confirmed. “We have €300 million to use for venture capital investments on the balance sheet. We don’t have any fundraising planned.”
Frankly, this is a bit surprising as the company’s past performance looks pretty good. According to Sainteff, the first fund is set to generate returns of between 3x and 4x. “For the second fund, it is too early [to say],” he continued. “But we have some clear winners like Pennylane. We entered the pre-seed stage and the company is valued at over €1 billion.”
The new strategy means that Global Founders Capital is now much smaller than it used to be, with only five partners remaining: 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 only on early-stage investments, plus the possibility of follow-on investments in later rounds (Series A, B, C, etc.).
Did Global Founders Capital choose not to raise third capital because it didn’t get enough support from potential limited partners or because of the current tech slump compared to 2021 (with the exception of the AI boom)? The decision probably depended on both.
“It was not the best time to raise money [limited partners]Saidef told us. “We think it’s been difficult to have the imperative to raise capital.”
“It’s an easy decision to make when you have 300 million euros in the bank,” he added. “If other VC firms were in the same boat, they would have made the same decision. We do not rule out the possibility of raising funds when conditions are appropriate and favorable.”
For now, the pivot reverses much of the fund’s previous expansion, when it scaled to more geographies, technology sectors and funding stages and the Global Founders Capital name was attached to a slew of deals.
