There’s a common critique among observers of the tech industry that Europe severely lacks “growth capital” funds when compared to the U.S. However, the situation isn’t as dire as it’s often portrayed. Highlighting this, growth equity firm Kennet has successfully gathered €266 million for its latest fund, Kennet VI, marking its most substantial fund to date and focusing on investing in B2B SaaS enterprises throughout Europe.
Kennet has carved a niche for itself by solely investing in mature B2B SaaS startups that are founder-owned, boasting either significant capital efficiency or are completely bootstrap-funded, meaning they have grown without any outside financing. An instance showcasing this approach is the event networking application Grip, which in 2021 secured $13 million in funding with Kennet at the forefront.
Kennet VI represents the continuation of Kennet’s investment legacy, stretching back over 25 years through its five preceding funds. Its most recent successful venture was with Eloomi in January 2024, a company specializing in learning experience platforms, which was acquired by the publicly-traded software firm Ceridian, achieving a 3.1x return on investment.
Past successful exits for Kennet include Nuxeo (with a 5x return), Dext (3.8x), CrossBorder Solutions (6.4x), Rimilia (2.5x), and Impartner (2.6x).
Kennet’s investment often represents the first influx of external capital for these companies, aiding in their scalability, international expansion, assembling of elite management teams, and accrual of strategic value.
In a discussion with TechCrunch, Hillel Zidel, managing director at Kennet Partners, explained: “This newest fund aligns with our past efforts, focusing on B2B software that caters to companies that are either bootstrap-funded or excel in capital efficiency during their growth phase.
“We might be unique in concentrating exclusively on this segment. For each entity we collaborate with, our aim is to continually provide extensive support to founders who’ve bootstrapped their operations. Our track record of exits proves that investing in solid, strategically valuable enterprises allows for successful exits regardless of the current market cycle,” Zidel added.
The raising of the Kennet VI fund was achieved with significant backing from cornerstone investor Edmond de Rothschild Private Equity, which began its investment journey with the fund in 2017. Additional commitments came from Bpifrance, British Patient Capital, and Federated Hermes Private Equity.
The growth fund sector in Europe has seen increased activity, with Index Ventures announcing $2.3 billion in new funds earlier this year. This substantial sum was divided across various stages, including $800 million for venture investments and $1.5 billion aimed at supporting growth and late-stage firms.
Beyond the typical venture capital landscape, the somewhat under-the-radar “growth capital” niche often yields impressive returns for entrepreneurs keen on maintaining substantial ownership and control. This is particularly appealing for those who are prepared to bootstrap their companies over extended periods to achieve revenue growth and profitability.
Compiled by Techarena.au.
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