Former partners from Speedinvest and Target Partners are today launching a new fund, Backtrace, to invest in early-stage software developer, security and AI infrastructure startups, founding partners Michael Münnix and Dominik Tobschall tell Sifted. The Munich-based fund has raised €10m for its first close out of a planned €30m, which it hopes to complete within the next year.
Though many investors have been enamoured by deeptech recently, the pair are aiming at investing in less-sexy tech: instead of fusion reactors, rockets, or satellites, Backtrace will target “boring,” middle-layer startups, says Münnix.
In other words, the fund will back so-called picks and shovels infrastructure tech — the types of software and developer tools that lie underneath the application layer of software that users interact with, but above hardware like microchips. This will include “everything around AI but on the infrastructure side”; things like integrated software and hardware architecture in data centres to handle LLM workloads, says Münnix.
Examples of such startups include Gitpod, which builds a cloud-based development environment for software engineers and Adjust, which helps scale phone apps — both of which they invested in at previous firms.
Backtrace will invest pre-seed cheques of between €750k to €1m and seed cheques of over €1m into these companies, the partners tell Sifted. They plan to lead or co-lead deals and aim to invest in 20 to 25 companies.
“If you build anything on the application layer, you need all the tools from this layer below,” Münnix says. “These companies are quite sticky, and you don’t replace them once your application is successful.”
The fund is close to making its first investment, the partners tell Sifted.
‘We probably could have picked a better time’
But the fundraise comes at a difficult time for many VCs — especially for first-time funds like Backtrace that have no track record yet. Tobschall, who left Speedinvest at the end of December (he remains a venture partner at the firm), acknowledged it was an “interesting” time to leave the firm — which raised its fourth early-stage fund of €350m earlier this year.
“We probably could have picked a better time,” Münnix, who remains a venture partner at VC firm Planet A, adds. “It was a learning curve for us.” So far the fund is backed by a number of entrepreneurs including Datadog cofounder Alexis Lê-Quôc, former Twilio CTO Ott Kaukver, and Florian Heinemann from Project A, as well as family offices including Perpetual Investors and Speedinvest.
The pair joined up in early 2024 to start raising the fund, having worked together previously at Target Partners.
Pushing back on European tech sovereignty
The pair plan to help companies orient themselves towards the US from the start. “I think that’s kind of the winning combination: having R&D in Europe, at least in the beginning, and building up the companies in the US right from the get-go,” says Tobschall.
“We are not dogmatic European investors, but we like Europe,” Münnix adds. He says that almost all of their previous portfolio companies’ exits happened in the US and that that will likely remain the case.
It’s a different take on the hot European tech sovereignty debate — where VCs and policymakers alike aim to untether Europe from its reliance on foreign powers for key tech and infrastructure. Having a “European version of XYZ” isn’t the answer, they argue.
“We need to innovate here, and we need to also have our own technology, but not as a copycat from something that’s already out there,” says Münnix. “We need to get ahead of the curve.”
Read the orginal article: https://sifted.eu/articles/speedinvest-target-partners-vc-fund-news/
