Facebook co-founder Eduardo Saverin’s global investment firm B Capital sees opportunities in late-stage growth investing despite recent fundraising woes for many private tech startups.
“While this is a challenging fundraising environment for many private tech companies, we believe this is an attractive time for late-stage growth investing,” its General Partner Sami Ahmad said in an interview with TNGlobal.
The global multi-stage investment firm, has announced last month the close of B Capital Opportunities Fund II with aggregate capital commitments of $750 million, nearly doubling the size of its predecessor B Capital Opportunities Fund I.
The fund received strong participation from both existing and new investors, representing a diverse global base of private and public pensions, family offices, high net worth individuals, and sovereign wealth funds, B Capital said in a statement then.
The close of the fund came as tech startups are facing a more challenging fundraising environment. Total funding into US tech startups dropped 46 percent to $19.5 billion in the first quarter of 2024 (till March 15, 2024), compared with $36 billion in Q1 2023, according to data platform Tracxn.
US investors injected $170.6 billion into startups in 2023, a decrease of nearly 30 percent from the $242.2 billion recorded in 2022, as the venture capital funding market continues to struggle with valuation resets amid rising interest rates, according to PitchBook data.
“We believe this is an attractive time for investing. We are grateful that our investors share our optimism and conviction in supporting great founders and high-performing companies looking to reach that next level, while they prepare for potential exits,” he said.
“The Fund will focus on later-stage growth investments in top-performing companies across Technology, Healthcare and Climate. We will continue to identify the best opportunities within those sectors where we can have an immediate impact on a company’s next phase of growth,” he shared.
With more than $6 billion in assets under management across multiple funds, B Capital focuses on seed to late-stage venture growth investments, primarily in the technology, healthcare and climate tech sectors.
Founded in 2015, B Capital leverages an integrated team across nine locations in the United States and Asia, as well as the consulting expertise of its strategic partner, the Boston Consulting Group, to provide the value-added support entrepreneurs need to scale fast and efficiently, expand into new markets and build exceptional companies.
In the interview, Ahmad also shared B Capital’s strategy and plans for the latest fund, among others.
Below are the edited excerpts:
B Capital focuses on technology, healthcare, and climate tech. Are there any specific sub-sectors within these areas that the Fund will prioritize?
The Fund will focus on later-stage growth investments in top-performing companies across Technology, Healthcare and Climate. We will continue to identify the best opportunities within those sectors where we can have an immediate impact on a company’s next phase of growth.
Follow-on versus New Investments: The majority of the Fund will be used for follow-on investments. Does this suggest B Capital is particularly bullish on its existing portfolio, or is there another reason for this focus?
The majority of the Fund will seek to identify follow-on primary and secondary investment opportunities in existing, high-performing B Capital portfolio companies, and a portion of the Fund will be allocated to invest in new investment opportunities where we see significant potential.
Our multi-stage investment platform enables us to identify promising founders at an early stage and provide continuous support throughout their journey of building and scaling their companies.
Can you share any specific examples of existing B Capital portfolio companies that might benefit from follow-on investments from Fund II?
In June 2023, the Fund made its first investment through a secondary purchase in Icertis, a leading contract intelligence company and existing B Capital portfolio company.
Since first backing Icertis in 2017, B Capital has used its value-add platform to help Icertis connect with other strategic investors, expand into new markets and explore organizational design structures.
Our continued partnership with Icertis serves as an example and exemplifies our differentiated approach to accelerating value creation. Recently Icertis reached a significant milestone, crossing $250 million in accounting rate of return (ARR).
For the new investments, is there any sector/ geographical area B Capital will prioritize and why?
We are focused on identifying the best opportunities in North America and Asia where we can have an immediate impact on a company’s next phase of growth across Technology, Healthcare and Climate.
The Fund will focus on North America and Asia. For the Asian region, is there any particular markets B Capital focuses on?
As our platform has grown globally, so have our Asia-specific capabilities and investments. We have been investing in the region since B Capital was formed over eight years ago, and it continues to be an area of focus and a core part of our global strategy.
How are current market conditions impacting investment decisions in later-stage companies, particularly in North America and Asia?
While this is a challenging fundraising environment for many private tech companies, we believe this is an attractive time for late-stage growth investing. We are grateful that our investors share our optimism and conviction in supporting great founders and high-performing companies looking to reach that next level, while they prepare for potential exits.
How does B Capital differentiate itself from other investment firms when targeting later-stage companies in these sectors? What is B Capital’s competitive edge?
We bring a founder’s mindset and a global business-building perspective to our portfolio companies. With our value-add approach, in partnership with the Boston Consulting Group, we are able to help the most innovative entrepreneurs and businesses scale at speed, expand their market reach and build industry-leading brands and companies.
