Daphni Raises $215M for Third Fund

Daphni Blue Fund Announces First Closing

French venture capital firm Daphni has announced the initial closing of its new fund, Daphni Blue. The firm successfully secured €200 million, which translates to approximately $215 million based on current exchange rates.

The firm anticipates reaching a total of €250 million, or around $270 million, in investments by the year's end.

Past Investment Successes

Daphni boasts a strong portfolio of previous investments, including notable companies like Back Market, Swile, Hubcycle, and Pasqal. Since 2015, the firm has actively invested in a total of 70 European startups.

Future Investment Plans

The newly established Daphni Blue fund is earmarked for investment in approximately 40 additional startups. Key limited partners contributing to Daphni Blue include Crédit Mutuel Arkéa, Bpifrance, the European Investment Fund, PRO BTP, and Swen Capital Partners.

Strategic Investment Philosophy

Founding partner Pierre-Eric Leibovici emphasized the importance of differentiation and sustainability in investment decisions. He stated, “We need to ask ourselves how we can both differentiate ourselves, and support technologies or services that are sustainable when we invest in new projects.”

Leibovici also highlighted the cyclical nature of markets and the potential for consolidation or dominance by American companies, or a lack of significant breakthroughs.

Focus on Fundamental Science

While acknowledging the current prominence of artificial intelligence, Daphni is prioritizing fundamental science as the driving force behind the next wave of innovation. This encompasses fields such as life sciences, biology, physics, chemistry, and mathematics.

“When you talk about quantum computing, well, quantum computing is fundamental physics combined with hardware and software,” Leibovici explained.

He further noted that large language models are, at their core, mathematical advancements.

Expanding the Investment Team

To support this focus, Daphni is actively recruiting individuals with diverse academic backgrounds. Currently, the investment team includes both a PhD graduate and a PhD student.

“There’s another element that is a new trend. The new generation of researchers are much more open to commercializing their fundamental and applied research, because they see all their friends around them starting companies,” Leibovici added.

Refocusing on Science – A Coincidence?

Daphni’s shift towards fundamental science is not a direct response to French universities’ efforts to attract American researchers. “It’s a coincidence. We launched this long before there was this trend,” Leibovici clarified.

However, Daphni remains open to investing in American researchers who establish startups within Europe.

Looking Ahead: Deployment and Returns

The immediate priority for Daphni is the strategic deployment of the newly raised capital. Leibovici stressed that successful fundraising is only a means to an end. “Raising is not an end in itself. What is an end in itself is distributing returns, and therefore exits,” he concluded.