Episode 1 announced the close of a €88.8 million early-stage fund, including a €23.3 million cornerstone commitment from British Patient Capital and the National Security Strategic Investment Fund. This fund, the third from the firm, will enable Episode 1 to back a new generation of B2B innovators at pre-seed and seed stage, as well as deepen their reputation as the UK’s most innovative early-stage investor.
Launched in 2013, Episode 1 has backed over 69 portfolio companies to date, including Carwow, Huboo, CloudNC, Raft, Robin AI, Fatmap and Omnipresent. 73% of portfolio companies from their prior fund have gone on to raise a Series A (~3x higher than the average pre-seed and seed graduation rate). The team has also overseen high-profile exits including Fatmap (acquired by Strava), Passfort (Moody’s), Feedr (Compass Group), Touch Surgery (Medtronic) and Atlas (Meta).
With this capital, the team will be making investments of between £250k and £3 million in pre-seed and seed-stage startups, with a significant amount allocated for follow-ons. Episode 1 plans to make between 10 to 15 investments per year in software-led companies operating primarily in the UK which focus on key areas including AI, TechBio, open-source, software infrastructure, healthtech and marketplaces. There will also be some allocation available for US and European-based companies that have a UK footprint. The team has already begun deploying capital from the fund.
Hector Mason, General Partner at Episode 1, commented: “This new fund, our biggest yet, is really a testament to the work of our portfolio founders who are building some of the fastest growing companies in Europe. It’s their tenacity, creativity, and vision which has enabled our fund to go from strength to strength and made this new fund possible. As a team, we never sit still. This fund gives us the ability to double down on our team and the proprietary tech that’s got us to where we are today, as well as providing more firepower to invest in the next generation of extraordinary founders.”
Over one-third of the new fund’s LPs are former or current founders, including 21 founders previously backed by Episode 1. Other founder LPs include Alex Chesterman (founder of Zoopla and Cazoo), Aidan Corbett (founder of Wayflyer), Aron Gelbard (founder of Bloom & Wild), and Alex MacDonald (founder of Velocity Black and Sequel).
British Patient Capital is joined by a range of other additional institutional investors, including listed VC firm Molten. Episode 1’s previous funds have all been backed by the British Business Bank’s Enterprise Capital Fund.
Christine Hockley, Managing Director of Funds at British Patient Capital, said: “Episode 1 has a track record of investing in UK B2B tech start-ups through a team of investment professionals with operational expertise. We are pleased to partner with them in supporting the next generation of homegrown tech start-ups to scale into the leading businesses of tomorrow.”
Going forward, Episode 1 will continue to deepen its reputation for adding genuine value to founders, as well as building operational excellence across the firm as it scales.
Episode 1’s targeted founder support includes: deploying Episode 1 team members into startups to help source senior hires; optimising portfolio companies’ future fundraises to set them up for a successful Series A; and offering hands-on support at critical points in the startup journey.
The team – which includes two colleagues with PhDs in AI – has developed proprietary, data-driven deal-sourcing tools to help identify the most promising founder talent very early on. For many of the leads discovered through these tools, Episode 1 is the first fund the founders have spoken to. In addition, the recent strategic hire of CFO Steph Orde has seen back-end processes streamlined and automated, freeing the investment team from the admin-based tasks which can leave VCs hamstrung and restrict the time they can dedicate to their portfolio.
Episode 1 has also built market-leading ecosystem initiatives designed to unlock access to venture for first-time founders and demystify the process of raising. This includes Focal, the leading open access demo day which receives over 4,000 applications per year from startups wanting to pitch to potential investors, and Riding Unicorns, an industry-leading podcast which has seen hundreds of thousands of downloads to date, profiling 150 founders and investors, many of whom have become investors in the fund.
Read the orginal article: https://www.eu-startups.com/2024/02/london-based-episode-1-closes-e88-8-million-fund-to-back-early-stage-b2b-innovators/
