- Consumer-focused VC firm Felix Capital has raised $600 million for a new fund.
- The fund is its fourth since inception in 2015, and will invest in emerging sectors such as Web3.
- The raise comes as investors prepare to back private companies more cautiously amid falls in valuations.
Felix Capital, a London-based venture capital firm behind consumer tech companies such as Deliveroo, Farfetch and Peloton, has raised $600 million in capital for a fresh fund, taking the total funds under management to over $1.2 billion.
The fund, Felix Capital’s fourth since its inception in 2015, doubles the amount of capital overseen by the firm as it looks to spearhead a wave of new investments into emerging sectors such as Web3 and other consumer areas amid a critical time for the global startup ecosystem.
Market uncertainty as a result of soaring inflation and geopolitical risk has triggered a severe downturn in public and private tech markets. The downturn and VC pullback has already affected tech startups that have fetched lofty valuations over the last decade.
In recent months, several unicorn startups worth billions of dollars such as fintech giant Klarna have been forced to cut jobs, put themselves up for sale or face significant cuts in valuation as an uncertain funding environment has cast a shadow over their future.
For Frederic Court, Felix Capital’s founder and a former investment banker at Lazard, the current panic among VCs and startups follows a year in which attitudes to growth were “very exuberant”, but he believes the industry “has been reminded that macro matters” in 2022.
“The main difficulty over the past 18-24 months was not so much to find attractive opportunities or great companies or great founders, it was more a question of assessing what those companies were worth,” he said.
Despite the challenging environment, Court believes the technology-led consumer trends that emerged during the Covid-19 pandemic are here to stay for the long-term, giving reason to remain confident in investments.
“People got used to the convenience of ordering online, using new tools for collaboration and communication and all these new platforms for entertainment, creativity,” he added. “All of this is not going away.”
Despite this, Court said he doesn’t think many companies will go public soon given “a slowdown” in IPO listings, but expects strategic mergers to take place where it makes sense for startups to “rebalance their business or readapt to the needs of the modern consumer”.
Felix Capital, which closed its fund earlier this year after exceeding its $500 million target, will look to invest in up to 25 tech startups over the next couple of years across Europe and the US at an early stage, but holds flexibility to invest into later stages too.