Sweden’s EQT Ventures closes its third fund at €1.1B to double down on European and early-stage startups • TechCrunch

Startups may be in a funding rut, but the sun shining on some VCs suggests a new trend. EQT Ventures, the venture fund arm of Sweden’s investment giant EQT making early-stage bets on startups primarily in Europe, has closed its latest fund and filled its coffers with €1 billion (and $1.1 billion in total commitments).

This brings the total raised by EQT to €2.3 billion since EQT Ventures launched in 2016. To date, the firm has backed some 100 companies, with 18 exits and nine “unicorns” (Wolt, Small Giant Games, Einride, Handshake, Netlify and Instabox/Instabee are in that group). This third fund was quickly raised and closed between February-June of this year. The final paperwork is now in place. 13 investments have been made from it (Juni and Nothing, Knoetic, Candela, among others).

As larger private companies look for funding or exit opportunities, EQT has been a key deal maker in recent months. This includes the recent acquisition of Billtrust, a New Jersey-based company for $1.7 billion, and leading an investment round to Knoetic.

It has, however, put its money where it is needed. EQT Growth, a sister company, announced earlier this year a $2.4 Billion fund primarily aimed at scaling European startups. Growth has supported the likes Vinted, Epidemic Sound, and Mambu.

The plan will be to use this latest EQT Venture fund for similar geographical ends: The firm wants to use it to make investments of between $1 million and $50 million, with about two-thirds of all investments falling in Europe, and the rest across the U.K. and the U.S., said Lars Jörnow, a partner at the firm.

In terms of categories, EQT Ventures will remain generalist but ideally is on the lookout for startups that address “where society has problems,” Jörnow said. He said that this includes green-tech investments and transportation, as well as the future of work (specifically, areas such tools and platforms for freelancers).

The firm’s close of the fund speaks to what appears to be a bifurcation in the world of tech investing. Although funds and firms that are concentrating on larger companies and those at later stages may be experiencing big losses, there is still confidence among the limited partners that investors who focus on smaller stages have great opportunities. “The higher the valuation before the contraction, the bigger the fall,” he warned.

It is also helpful to have a track record of successful bets. Jörnow noted that the company’s target had actually been €900 million. His conclusion was that the company had achieved a relatively rapid close, and even exceeded that number.

“Investors think it’s a great idea to back VCs that are investing in early stage with a much longer holding period,” he said. On average, EQT expects exits to be made in 2031, “when the world will look different than today,” he added. “If you back the best founders, they will grow startups regardless of the current macro climate.”