Highland Europe Raises €700M Tech Growth Fund

Highland Europe, a prominent tech growth fund recognized for its investments in successful companies such as GetYourGuide, Huel, WeTransfer, Wolt, and Zwift, has successfully concluded its fourth fundraise, securing €700M in a relatively brief timeframe compared to previous funds. Highland intends to reinforce its approach of concentrating on a limited number of growth funds specifically focused on technology-based startups, a segment of the financial landscape that remains notably under-resourced in Europe.

The organization has also expanded its leadership team through the advancement of Jean Tardy-Joubert, Gajan Rajanathan, and Ronan Shally to the position of Partner. Tardy-Joubert and Rajanathan previously worked at Qatalyst, a San Francisco-based investment bank specializing in the technology industry, joining Highland in 2017 and 2018 respectively. Shally has been a member of the firm since 2014 and currently serves as Highland’s Chief Financial Officer.

With this new fund, Highland Europe’s total assets under management have increased to €1.8bn.

In the last year, the firm has supported seven emerging teams, allocating approximately €200M to companies including Alkemics, Cobalt, DominoDatalab, Farewill, Meditopia (described as the ‘Calm for the Middle East’), Modulr, and Supermetrics, in addition to existing portfolio businesses.

Companies within Highland Europe’s portfolio have attracted significant further investment, totaling €730M in follow-on funding over the past year, and have also completed seven mergers and acquisitions.

The firm also stated that it assisted the leadership teams of Spot and Smartly.io in evaluating strategic opportunities and private equity proposals, resulting in “significant realization of value.”

Fergal Mullen, a co-founder and partner at Highland Europe, stated: “The year 2020 witnessed technology adoption trends that were previously projected to unfold over a decade being accelerated into a single year, impacting both consumer and business sectors. Software has become a mainstream, essential component of operations. The potential for growth-stage investments in Europe has never been more apparent or pressing.”

Data reveals a considerable disparity in the availability of growth funds in Europe. According to Dealroom.co, European companies secured 38% of global venture capital at the Seed stage, but this proportion decreased to 21% at Series B and 14% at Series C (funding rounds of €40-100M). Estimates suggest that only one in eight European companies achieves significant scale, compared to one in four in the United States, indicating a funding gap for European businesses at the growth stage.

In an exclusive conversation with TechCrunch, Mullen explained: “We completed the fundraising process remarkably quickly, beginning on July 26th and concluding on September 24th. We benefit from an exceptional investor base, with many returning investors increasing their contributions.

“We consistently deliver strong returns and remain committed to our established strategy. We adhere to our stated investment principles, maintain a focused approach, and our investors appreciate this consistency. We do not engage in early-stage investments, pursue private equity deals, or venture into areas outside of core technology. Investors understand what they are supporting, and the returns demonstrate the effectiveness of our approach. The fund is currently profitable, with investors having already received returns exceeding their initial capital contributions, and there are still 12 active companies within the portfolio poised for future growth.”

Mullen highlighted the resilience of GetYourGuide, a portfolio company severely affected by the collapse of the travel industry during the pandemic: “They were arguably the hardest hit. Last year, they were on track to exceed a billion euros in bookings, and within two weeks, that figure dropped to zero. And by zero, I mean completely halted, with even future bookings disappearing. However, they persevered, partly due to their substantial cash reserves from a recent fundraising round. Additionally, the founding team implemented early cost-cutting measures.”

“These measures included founders accepting 50% pay reductions and offering employees the opportunity to exchange a portion of their salary for equity. They anticipated around 50 employees would participate, but 157 opted for a 30% pay cut in exchange for additional equity. This, combined with other efforts, allowed them to maintain a similar cash position at year-end despite a significant revenue decline – from hundreds of millions to around 40 million euros. We also provided an additional 115 million euros in funding. They are now well-positioned to capitalize on the anticipated recovery in the spring and summer. It’s a remarkable story worth sharing,” Mullen added.

Highland’s 2020 investment highlights:
* ContentSquare – $190m Series D with Highland Europe’s participation
* Featurespace – £30m with Highland Europe’s participation
* Zwift – $300m with Highland Europe’s participation
* Modulrfinance – £18.9m Series B led by Highland Europe
* Wolt – €100m follow on Series D co-led by Highland Europe
* Domino Data Labs – $43m Series E co-led by Highland Europe
* Alkemics – €21m Series C led by Highland Europe
* Meditopia- $15m Series A led by Highland Europe
* Farewill- £20m Series B led by Highland Europe
* CobaltAI- $29m Series B led by Highland Europe
* Supermetrics – €40m Series B led by Highland Europe
* Contentsquare, Wolt, & Zwift raised €100m+