For a VC firm, the second fund is a make-or-break moment. With seed capital, you’re raising money based on an investment thesis because you have no track record, no ROI to prove you’re a competent investor. It’s a different story when it’s time to raise the second fund.
And Singular, a Paris-based VC firm co-founded by Raffi Kamber and Jérémy Uzan that invests across Europe, has two tidbits to share on that front. First, after raising 225 million euros for its seed capital ($245 million at today’s exchange rate), Singular managed to raise 400 million euros for its second fund. Second, all investors who participated in the first fund are returning as limited partners in the second fund — that’s a good sign.
This was not an obvious outcome for the VC firm, as it has been a wild ride over the past two or three years in venture capital. After the investment frenzy of 2021 and early 2022 that led to crazy valuations, things have come back down to earth in dramatic fashion.
According to Atomico’s report on the state of European technology, European startups are on track to raise $45 billion this year. In 2022, European startups raised $85 billion.
“There were a lot of companies raising capital in fairly quick cycles and they raised the highest level of what they could raise. And so, statistically, the average check had gone up and the growth rate had accelerated a bit,” Jérémy Uzan told me.
“So we got into a position where we had to ask ourselves, what are we going to do? Do we engage or stay out? To play or not to play? . . . We chose to play this game — after talking to our LPs, of course,” he added.
Now, many startups are raising rounds at a flat or even lower valuation than their previous round. How did it affect Singular’s performance? The company does not share any metrics on the financial performance of its first fund. “It’s good,” Uzan said.
He also reiterated that existing LPs once again invested in the second fund. And the consequences of the VC investment frenzy were clear. This meant that Singular had to raise its second capital more quickly.
Singular raised its capital from big investors — pension funds, sovereign wealth funds, large family offices. Most of them have at least $10 billion in assets under management and are based around the world, from the US to Singapore.
Building a large European VC fund
Unlike many Paris-based VC firms, Singular invests in European startups from day one. In many ways, Singular is trying to build a Tier 1 VC firm that could compete with Index Ventures, Accel, Balderton, Atomico, EQT, etc.
“There are a lot of small funds that are springing up, very often built around individuals, either with an individual GP approach, or a seed capital approach with a specific vertical or focused on a specific geography,” Uzan said. “But a generic European-scale VC firm, no vertical, no geography, just competing against the few brands that naturally come to mind, I’m not sure if there was much news.”
He named Blossom Capital and Felix Capital as relatively recent newcomers to this kind of venture investment range. But, according to him, it is difficult to find a French VC firm as an example.
Many French VC firms are still focused on France first, with a few European investments here and there. About a third of Singular’s portfolio companies are based in France. But the rest – the majority – are spread over several European countries.
Singular invests in Series A rounds and beyond. “Our approach is that we have deep pockets so we can do a Series A where you need a lot of control to get in. But at the same time, obviously we don’t rule out funding very, very good teams from a very early stage,” Ouzan said. “And we have nothing against Series B rounds when we feel there is still a lot of upside potential.”
Some of Singular’s portfolio companies that I’ve covered in the past on TechCrunch include cancer care software startup Resilience, corporate mental health service moka.care, data tracking platform Soda, freelance accounting startup Indy, social stock app trading Shares, materials company that reuses carbon composite fiber Fairmat, real-time analytics API startup Tinybird, life insurance startup Life5, business software company for the hospitality industry Thynk and AI-based R&D startup focused on materials science Osium AI.
As you can see, it’s a big mix of industries and verticals. There is no clear common thread between these companies, except that there was an investment opportunity.
“We still have that approach — it’s a little bit stereotype, but it’s real — looking for the best teams. We think the teams will lead us to high-potential projects,” said Uzan.
And once they see an investment opportunity, Singular tries to lead as many rounds as possible so it can continue to be highly engaged with its portfolio companies and their CEOs. “Raffi says we think we’ve done a good job if we’re one of the 10 names on the speed dial list on your iPhone,” Uzan said.
