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Not a day goes by without confirmation that deep tech is on the rise in Europe and that public and private capital investors are coming here for it.
The latest example is OTB Ventures, which has closed a $185 million fund to invest in deep tech in Europe, with plans to deploy primarily at the Series A stage. However, up to 10% may be allocated to seed funding and 50% or more to follow-on investments.
OTB’s Early Growth Fund – the second and largest to date – is once again supported by the European Investment Fund (EIF), with support from the European Union under the InvestEU Fund. OTB co-founder and managing partner Adam Niewinski told TechCrunch that venture firms welcome this support and EIF’s evolving investment thesis.
“We see the EIF increasingly focusing on truly innovative technologies. You can call it deep technology, you can call it real technology, but what we are talking about is fundamental It’s about the real disruptive technology coming out of Europe in 2017 and being able to compete globally. Not just compete globally, but lead in global innovation.”
Another deep tech backer has entered OTB’s cap table. The NATO Innovation Fund (NIF) has begun rolling out €1 billion in investments in funds and start-ups from supporting members.
“Our first $1 billion flagship fund will invest at the intersection of deep technology, defense, security and resilience, with themes including energy, quantum computing, autonomy, climate, industrials, space and biotech. OTB is perfectly aligned with our mission,” NIF Managing Partner Andrea Travelson said in a statement.
OTB’s deep technology efforts are focused on four areas that appear to be fairly NATO-compatible: space technology, enterprise automation and AI, cybersecurity, and fintech infrastructure. That’s where fintech is going to be a little more innovative technologically. This could be, for example, an AI-powered anti-money laundering solution like Silent Eight, a Fund 1 portfolio company.
OTB has already started investing from this fund after its first close in November 2022, so we already know where this fund is headed. For example, the company’s nine investments to date include KYP.ai, a German startup that provides a productivity platform, and Semron, which develops innovative chips.
When asked tough questions about dual-use technology, OTB co-founder and managing partner Marcin Hejka was keen to dispel misconceptions. From space and IoT to 3D printing, it’s quite natural that the defense sector is increasingly applying technologies of civilian origin. This should not be confused with investing in weapons, it is quite different. .”
I wanted to ask NIF the same question, but NIF declined to be interviewed for this article, so this will have to wait.
This also means that it is not possible to confirm whether funds sent to OTB might also have been sent to deep tech funds in France or Austria, for example. Like NIF, OTB is headquartered in Amsterdam, with another of his offices in Warsaw, and NIF will also have a regional office in Warsaw. Perhaps more importantly, both the Netherlands and Poland are contributors to his NIF.
According to NIF rules, NIF only “invests directly in start-ups located in any of the 23 participating Allied countries,” and the list of backers does not fully overlap with NATO or EU member states. France is not included. However, the NIF’s geographic scope is less clear when it comes to indirect investments, as it only refers to “deep tech funds with transatlantic impact.”
Either way, OTB’s roots have advantages. The company boasts an “unfair advantage in access to deal flow in Central and Eastern Europe,” and this is reflected in its cap table. Its new fund is backed by CEE entrepreneurs, as well as those it previously supported. That LP includes Snowflake co-founder Marcin Zukowski, who was already on that journey when OTB was founded in 2017.
While OTB may have missed out on supporting Snowflake, there are other success stories from Fund 1, including Cisco’s acquisition of BabbleLabs in 2020 and the sale of Minit to Microsoft in March 2022.
Although it will likely be several more years before Fund II leads to M&A, Niewinski has broader hopes. “Our new fund furthers our mission to support disruptive deep tech startups that leverage Europe’s outstanding technology talent pool, the greatest natural resource our continent has to offer. It gives me strength.”
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