Irish venture capital company Act has launched a new €140 million fund that will back early-stage technology companies, its sixth and largest such fund to date.
The Dublin-based company said it had reached the first close of the Act VI fund, with more than 80 per cent of the fund already committed by investors.
The fund intends to back about 35 companies, and can invest up to €10 million in a company, working as a long-term investment partner. It is looking to invest across a range of technology sectors, with artificial intelligence and machine learning, enterprise, deep tech, health and energy and climate among the areas of particular interest.
Act managing partner John Flynn said the fund would be likely to do more deals at the seed stage, reflecting trends he has observed in the market, which has seen the growth rounds pull back.
“In the seed area, the actual average size of the rounds has continued to increase. They’re more protected from the vagaries of the stock markets. At the earlier stage, you’re investing now for companies in five years’ time so it’s been a good start for us,” Mr Flynn said. “There is a bit of a reset going on in the later stage rounds. At the beginning of the fund, we’re probably more active on the seed side. There’s a reasonably strong pipeline of stuff going on at the moment despite the turmoil in the public markets.”
The fund was legally closed in December, and Act has already begun investing, backing Conjura’s Series A round and providing seed funding for Trustap, Plasmabound, Clearword and Inferex.
However, Mr Flynn said the company was open to doing more with both early stage and expansion deals.
“I think we’re obviously going to be a little bit nervous, looking at the stage deals that are very highly priced, and still kind of trying to price themselves off metrics from last year. But for very high-growth companies, at the right price, we’re very keen to do more deals,” he said.
Act’s last fund, which was raised in 2016, was €92 million. The company, led by Mr Flynn, Debbie Rennick and John O’Sullivan, has raised more than €600 million in total in capital, with an investor base that includes the European Investment Fund, Enterprise Ireland, ISIF and AIB, along with a group of entrepreneurial family offices that provide both strategic support and co-investment capabilities.
“For founders, what they want in this era is a partner that can invest in their current company and support them into later rounds,” Mr Flynn said. “We’ve always been, I would say, reasonably conservative, and when we put in an investment into a company, we always make a reserve for good or troubled times. I think founders will probably get more particular about their VC’s strategies for being able to support them in the future.”