Draper Esprit makes secondaries bet on European tech

The London-listed investor has acquired stakes in two funds managed by Earlybird, a German VC firm with more than €1bn in assets.

Venture capital firm Draper Esprit has made a European technology investment by acquiring interests in two funds managed by Berlin-based venture capital firm Earlybird.

The London-listed firm bought a 27 percent interest in Earlybird GmbH & Co Beteiligungs-KG IV for around €63 million and a 5 percent stake in Digital East Fund 2013 for around $20 million, according to a filing to the London Stock Exchange on Monday.

EB IV, which according to PEI data is a 2008-vintage fund, has eight assets. Mobile games developer Peak Games and online loan comparison site smava accounted for around 78 percent of its net asset value as of the end of September. DEF 2013 contains 11 assets, with robotics company UiPath accounting for 85 percent of NAV.

Draper Esprit is aiming to raise £100 million ($129.2 million; €113.7 million) through a share offering to fund the acquisition and pursue further direct and secondaries opportunities.

Earlybird has more than €1 billion in assets under management. It is split into three teams: Digital West, which focuses on early stage technology investments in DACH, the Nordics, Benelux, France and Southern Europe; Digital East, which focuses on Eastern Europe and Turkey; and Health Tech.

Earlybird Digital West and Draper Esprit signed a strategic partnership agreement in July, under which they share dealflow, investment resources and do co-investments. Draper Esprit also bought an €18 million share in fund EB VI, a minority stake in the fund’s management company and promised to commit around €17 million per year over four years.

Draper Esprit’s chief executive Simon Cook told Secondaries Investor in 2017 that while it opportunistically buys stakes in individual companies, it is less likely to acquire portfolios and will generally do so alongside traditional secondaries buyers. In 2009 it partnered with Coller Capital and HarbourVest Partners to buy a stake in 3i’s venture portfolio.

“Occasionally, probably about once a year, we find a situation where a venture capital firm has decided to put a portfolio of assets up for sale and we have the ability to work out which are the great companies in that portfolio,” he said.