TempoCap has made its third exit in as many months as the hunt for tech-enabled assets intensifies.
The London-headquartered venture capital firm made an 11x return and internal rate of return of 125 percent after portfolio company Depop was sold to Etsy for $1.625 billion, according to a statement. The deal is the largest venture-backed acquisition of a private technology company in the UK since 2019.
Depop is an online marketplace that allows users to buy and sell unique fashion. Gross sales hit $650 million last year, up more than 100 percent year-on-year, the statement noted.
TempoCap initially invested through a primary funding round before “cleaning up the cap table” via three direct secondaries transactions, according to managing partner Olav Ostin. The firm was among the six largest investors in Depop, he said, without disclosing the size of TempoCap’s position.
Ostin first heard of Depop when one of his children asked if they could open a bank account so they could join the platform, he said.
In mid-May, it emerged that TempoCap portfolio company Acorns, a fintech business, was to go public in a $2.2 billion special purpose acquisition company deal. In April, software company Talentsoft agreed to be acquired by Silver Lake portfolio company Cegid.
These three deals mean that TempoCap will have returned 100 percent of capital invested across its entire portfolio in the space of five years, against a normal duration of around 10 years for VC funds, Ostin said.
TempoCap has executed all its deals so far with five large institutional investors. It is mulling raising a commingled blindpool fund of €150 million to €200 million, Ostin said.
He expects a wave of direct secondaries portfolios to come to market as institutions such as banks decide that VC is no longer a priority during an economic downturn: “It’s easier to sell a portfolio than make deep cuts to the operations of one company.”
TempoCap invests on a primary and secondary basis in European technology businesses and takes an active management role. It has invested more than €400 million and has 23 companies in its current portfolio.