UK Venture Firm Northzone Launches €1B Fund to Invest in Fintech and Web3 Startups

Northzone’s portfolio companies include crypto infrastructure startup Magic Labs, web3 privacy firm Sunscreen, and DeFi protocol Gro.
Image source: Northzone

Quick take:

  • Northzone will continue to invest in fintech, healthtech, SaaS, and consumer verticals.
  • The firm’s partner, Wendy Xiao Shadeck, said Web3 is a core investment sector.
  • The firm has previously participated in token sales.

London-based venture capital firm, Northzone, has announced its largest fund to date: €1 billion targeting fintech, healthtech, SaaS, consumer and Web3 verticals.

The fund will back startups from seed to IPO with cheques of $1 million to $40 million. Northzone has also earmarked a significant part of our capital for growth stage investments so that it can become a “full-stack” partner for its portfolio companies from Seed to pre-IPO stage.

Northzone’s portfolio includes Web2 giants such as Spotify, Klarna, Trustpilot, as well as Web3 companies such as crypto infrastructure startup Magic Labs, web3 privacy firm Sunscreen, and DeFi protocol Gro.

Wendy Xiao Shadeck, a partner at the firm, told The Block that Web3 is a “core sector” for the firm. Founded in 1996, Northzone has become of the most established and successful European early-stage venture funds with 7 unicorns exits and 9 IPOs, including Spotify ($28bn), iZettle ($2.2bn), and Avito ($2.7bn).

She wrote the firm’s crypto investment thesis in 2018 to share the firm’s view on the emerging developments of Web3 when Northzone was investing out of its $400 million eighth fund.

“Web3 and web2 two will likely start to converge in this fund cycle’s lifetime,” she said in an interview with The Block. “For instance, some of the web2 fintech companies in our last fund have launched tokens and some of our gaming companies have decided to base their follow-on rounds from web3 VCs — so it’s really hard to say exactly where the delineation will be.”

Xiao Shadeck told The Block that the firm can back startups via equity investments and token sales, and has previously participated in staking tokens. However, the firm will not be investing in NFTs as they currently do not fit its investment criteria.

While Northzone’s portfolio company, Gro, was affected by the depegging of Terra’s UST in May, the firm will continue keeping an eye on the Web3 infrastructure space and DeFi protocols.

Northzone’s team of 36 operates across 6 countries and represents 16 nationalities. The firm  has built a global network of more than 300 seasoned operators who have successfully scaled teams and who are at hand to support its founders on every step of their journey.

Unlike its European counterparts Cherry Ventures, and Aglae Ventures which also invested in Spotify, Northzone doesn’t have plans to launch a dedicated crypto fund yet, but will discuss with its limited partners about that when the time is right.

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