Pan-European VC firm Target Global has reached first close on a new €300m fund, with the firm looking to invest in fintech, SaaS and wellness startups.
The new fund, which is one of five currently operating at Target, brings the total assets under its management to €1bn. The firm hopes to close the fund at €400m by the summer and is looking to Europe’s emerging economies for investment opportunities, in addition to its core markets of London, Berlin and Tel Aviv.
To secure the new fund, Target partnered with UBS, the Swiss wealth management firm, which introduced clients to the fund. In addition to UBS, Target secured commitments from a range of new LPs, including FERI, as well as European hotel companies and real estate businesses, according to the fund.
Fintech, SaaS and wellness
Target Global, which is headquartered in Berlin, has previously made a string of investments into German companies, including DeliveryHero, WeFox and Auto1. The new fund will make initial investments of €10-20m and focus on several sectors.
“We are seeing a lot of changes in the investment space in Europe,” says Yaron Valler, general partner at Target. “But there are sectors that we are confident in.”
The first is fintech, where the firm is looking to repeat the success of its investment in Israeli payments company Rapyd, which is now valued at nearly €1bn and which Target was an early investor in.
“We will do a lot more SaaS enabled marketplaces too,” Valler says, “especially those with a twist.” By that Valler means, he says, companies like Plentific, the SaaS marketplace for building maintenance that Target’s last growth fund invested in.
“We’re also interested in Industry 4.0, where we think Europe is leading the pack,” Valler says, “and we’re interested in healthcare and wellness technologies too.”
Emerging economies
With wellness, Valler says, Target is looking at companies outside of the key innovation hubs, namely London and Berlin. “Wellness apps can innovate from outside of those centres, so we’re looking at interesting geographies around the European Union.”
Target normally invests 70% of its funds in Europe, 20% in Israel and 10% in ‘opportunistic investments’, Valler says, and this fund will be used in the same way.
“We’ll see more companies coming out of the emerging European economies I think,” says Valler, “places like Poland, Estonia and Latvia.”
Target’s previous growth funds invested in Polish startup Docplanner, for example, which facilitates online bookings for doctors.
“These are services that have been available in the US and in Europe for a long time, but haven’t been available in emerging economies. We see a lot of benefits in driving innovation from Europe into emerging economies - social benefits but also financial.”
The future of Berlin
Despite the opportunities Target perceives in the emerging economies of Europe, Berlin, where the firm is headquartered, remains a focus.
The German capital, famed for the success of its ecommerce startups, is starting to see more tech companies, Valler says, as well as fintechs, with companies in the sector even gravitating from London to Berlin because of Brexit.
And Valler believes the success of companies that Target has previously invested in means more success for the rest of Berlin’s startups too.
“The massive exits in Berlin right now, DeliveryHero and, if you believe the press, the impending IPO of Auto1, will create massive amounts of liquidity in the Berlin ecosystem and that means it will feed itself. The stars that are shining in the Berlin sky are going to give birth to a lot of other startups.”
