LONDON, ENGLAND – JANUARY 20: City workers walk past the Lloyds building in the financial district, … [+]
In a bold move that’s sending ripples through Europe’s venture capital ecosystem, 28-year-old British podcaster turned investor Harry Stebbings has just closed a $400 million fund for his firm, 20VC. This latest development not only cements Stebbings’s position as a key player in the VC world but also highlights the shifting dynamics of tech investment in Europe.
The Rise of 20VC
Founded by Stebbings, who gained fame through his wildly popular podcast “The Twenty Minute VC,” 20VC has quickly ascended the ranks of European venture capital firms. The podcast, which boasts tens of millions of downloads per month, has become a powerhouse platform featuring tech luminaries such as OpenAI’s Sam Altman, Shein’s Donald Tang, and LinkedIn’s Reid Hoffman.
“We leverage media to be the best investor,” Stebbings told the Financial Times, underscoring the unique approach that has propelled 20VC to prominence.
The new $400 million fund represents a significant leap from 20VC’s previous $140 million fund raised in 2021. This rapid scaling speaks volumes about the firm’s performance and the confidence it has inspired in its backers.
A Star-Studded Investor Base
The impressive roster of investors backing 20VC’s new fund includes institutional heavyweights like the Massachusetts Institute of Technology, alongside individual tech moguls such as Thrive Capital’s Josh Kushner. This diverse and high-profile investor base not only provides capital but also brings a wealth of expertise and connections to the table.
Navigating Challenging Waters
Raising such a substantial fund in the current economic climate is no small feat. As Stebbings himself acknowledges, “$400 million at this time is a tough amount to raise.” The achievement is particularly noteworthy given the broader context of the tech investment landscape.
As recently posted on LinkedIn by Yoram Wijngaarde, founder at CEO at Dealroom, according to a recent report by HSBC Innovation Banking and market tracker Dealroom, UK-based VCs are projected to raise more than $12 billion in new funds by the end of 2023. While impressive, and surpassing the 2021 boom-time record of $11.5 billion, these figures are still overshadowed by the fundraising prowess of Silicon Valley VCs.
The 20VC Advantage
What sets 20VC apart in this competitive landscape? Stebbings points to his podcast as “a huge magnet for the best founders.” The show’s reach and influence have undoubtedly played a crucial role in deal sourcing and relationship building within the tech ecosystem.
However, Stebbings is quick to note that a successful podcast alone isn’t enough to justify such a large fund raise. “Real differentiation” is key, he says. To that end, 20VC has expanded its operations to include three “sub funds” focused on sales, growth, and product development. These specialized teams, led by former startup executives and managers, enhance 20VC’s ability to source deals and provide value to portfolio companies.
A Track Record of Success
While 20VC is a relatively young firm, it has already made its mark with some impressive investments. Dealroom.co data reveals that 20VC has invested in four European unicorns at the seed stage, and six globally. This early-stage acumen puts the firm ahead of many of its peers and demonstrates its ability to identify and nurture high-potential startups.
Some of 20VC’s notable investments include:
- Linktree: A social media profile page creator
- Tripledot: A mobile games developer
- Poolside: An AI-powered coding assistant
Lessons Learned and Future Focus
Like many investors, Stebbings and 20VC weren’t immune to the exuberance of the recent tech boom. The firm invested in high-profile but ultimately challenging ventures such as virtual events platform Hopin, which saw its valuation plummet from $7.8 billion to a fraction of that within a year.
Reflecting on these experiences, Stebbings admits that investing in consumer tech can be “very hard” due to the fickleness of users. He now says that the “most brilliant companies” in 20VC’s portfolio are often the least flashy ones, describing them as “boring as hell.”
The AI Question
As artificial intelligence dominates tech conversations and investment theses, 20VC is approaching the sector with a mix of enthusiasm and caution. Stebbings notes the unprecedented revenue growth of AI companies but raises a crucial question: “Is this sugar-high revenue or is this sustainable enduring value?”
This measured approach to AI investing reflects a broader shift in the VC world, as investors grapple with how to value and support companies in this rapidly evolving space.
The European VC Landscape
20VC’s successful fund raise is part of a larger trend in European venture capital. Despite global economic headwinds, European VCs have shown remarkable resilience. In addition to 20VC, other major players such as Index Ventures, Atomico, Accel, and Balderton Capital have all raised new funds this year.
This surge in available capital comes at a time when dealmaking in the private tech sector has generally slowed, particularly for later-stage startups. The AI sector remains an exception, attracting significant investment despite the overall cautious environment.
Challenges and Opportunities Ahead
While the influx of capital is a positive sign for the European tech ecosystem, challenges remain. The pace of exits through acquisitions or IPOs has been slow, making it difficult for VCs to realize returns and repay their limited partners.
Moreover, as Stebbings points out, determining sustainable value in AI companies is particularly challenging given their rapid revenue growth. This creates both opportunities and risks for investors like 20VC as they navigate this new terrain.
The 20VC Approach
In response to these challenges, 20VC has developed a unique approach to deal-making and founder support. Stebbings leverages his media savvy, employing his social media production team to create custom pitch materials for founders. This bespoke approach helps 20VC stand out in competitive deal situations.
Additionally, the firm’s focus on providing operational expertise through its specialized sub-funds addresses a critical need in the startup ecosystem. By offering targeted support in areas like sales, growth, and product development, 20VC aims to add value beyond just capital injection.
Looking Ahead
As 20VC deploys its new $400 million fund, all eyes will be on Stebbings and his team to see if they can maintain their impressive early-stage investment track record. The firm’s ability to navigate the complex AI landscape while also identifying opportunities in less hyped sectors will be crucial to its long-term success.
For the broader European VC ecosystem, 20VC’s rise represents both a challenge and an opportunity. The firm’s success could inspire more innovative approaches to venture capital, potentially attracting more global capital to the European tech scene.
Conclusion
Harry Stebbings and 20VC have undoubtedly made a significant impact on the European venture capital landscape. Their ability to raise a $400 million fund in a challenging environment speaks to the firm’s unique value proposition and Stebbings’s personal brand within the tech community.
As the lines between media, networking, and venture capital continue to blur, 20VC’s model may well represent the future of tech investing. However, the true test will come in the years ahead as the firm deploys its capital and seeks to generate returns in an increasingly complex and competitive global tech ecosystem.
For now, one thing is clear: with this latest fund raise, 20VC has firmly established itself as a major player in European venture capital, and Harry Stebbings has proven that youth, media savvy, and traditional investment acumen can be a powerful combination in the world of tech finance.
