Two large equity funds have launched in Europe recently, signaling a potential shift in the market. Liquidity Group, a growth-stage debt financier, raised $40 million earlier this year and introduced a $250 million debt fund for European tech companies. Liquidity uses its technology to make faster decisions on deploying debt facilities, and it also operates Mars Growth Capital Europe, a debt fund for late-stage European tech companies. Now, Liquidity and MUFG are launching five non-dilutive (debt) funds under Mars, including the first equity fund aimed at late/growth-stage companies. MUFG is also increasing its capital commitments to MARS Growth Capital’s non-dilutive funds from $750 million to $1 billion.
In addition, Dawn Capital, a specialist B2B software venture capital firm in Europe, raised $700 million for investment. This includes the $620 million Dawn V fund for Series A and B stages, with investments ranging from $10 million to $40 million, and the $80 million Dawn Opportunities III fund for later-stage companies at Series C stage onwards. Dawn Capital has previously invested in successful companies such as Mimecast, iZettle, and Tink. The firm sees great opportunity in the European market and anticipates further growth.
The arrival of these funds suggests several trends in the market. Late-stage capital to support companies preparing for IPOs is making a comeback, as investors predict a flat fourth quarter this year followed by a rebound in early 2024. Early-stage VC funds like Dawn are also actively raising and deploying funds, taking advantage of better deals due to lowered valuations. With the rise of generative AI technologies, early stage capital is in high demand. These trends were observed at recent events in London, where VCs discussed the market outlook and emphasized the importance of preparing companies for M&A and IPOs. Overall, despite the current market conditions, larger funds are entering the scene to capitalize on future opportunities.