Hoxton Ventures has announced a $40 million [£24.5 million] venture capital fund that it intends to invest in European technology firms and has been set up by two technology industry veterans.
It is the brainchild of Hussein Kanji and Rob Kniaz, who have both held operational roles at Microsoft and Google, and left their respective venture capital firms, Accel Partners and Fidelity Ventures, to form the new fund that will target companies early on.
“In the past couple of years, we’ve seen a gap emerge in the early stage European market. It is difficult for entrepreneurs to raise their first £1-2 million. Too many European investors prefer to wait for businesses to mature,” said Kanji.
The announcement represents the first time that the US microcap venture investing model has landed on European shores and the fund intends to focus in four to six investments per year. The microcap model involves former technology executives building a small fund that works closely with entrepreneurs to build value.
The companies the fund will focus on are startups that can be scaled into leaders in newly emerging categories in the industry with Europe considered fertile ground for such startups.
“Recent research shows there are four to six billion dollar companies being formed each year in the U.S., largely on the back of technology industry changes,” noted Kniaz. “Europe is consistently producing one to two of these types of companies a year. Finding, funding and nurturing them is our mission.”
The fund has invested in two companies right off the bat with Swedish ad company Campanja as well as ecommerce firm Tizaro and the founders will hope to have similar success as their respective funds have had in the past.
“We focus on making sure our companies are well connected in Silicon Valley,” added Kniaz. “For example, we recently invested in Campanja in Sweden, a startup building on top of Google’s ad platform. We convinced Ram Shriram, a board director of Google, who was also one of its earliest angel investors, to co-invest with us. It was his first European investment.”