Deeptech-focused UK venture capital firm IQ Capital has hit a £92m first close for its third fund targeting the sector.
The firm, which is hoping to collect up to £125m for IQ Capital Fund III, plans to use vehicle to invest in seed and Series A rounds for businesses working in transformational deep-tech, AI or with disruptive algorithms at their core.
IQ said investors in the first close of IQCFIII included family offices, wealth managers tech entrepreneurs and several CEOs that were previously backed by IQ Capital, alongside equity investment from British Business Investments, the commercial arm of the British Business Bank.
The firm is currently basking in the glow of its $325m exit of Grapeshot to computer tech giant Oracle in May, which saw it return the entirety of its debut fund twice over.
That vehicle has been able to deliver a healthy 3.5x net return to its LPs in the wake of the deal, IQ said.
Fund II has been used to invest in 22 deep-tech startups over the last four years, including leading investments in companies including Privitar, which enables banks to enforce a company-wide privacy policy to protect their customers. The company also organisations to mine their big data assets to generate business insight, while offering full auditability for regulators in the light of new data protection and privacy regulations.
It also backed BMLL, a big Data platform for historical full-depth trading exchange data, and Thought Machine, a oftware for a ‘bank-out-of-the-box’ run fully in the cloud
Firm partners Max Bautin, Ed Stacey and Kerry Baldwin have worked together for over 12 years, and achieved numerous strong exits to tech giants including Google, Apple, Oracle and Huawei and high profile IPOs including Autonomy.
Bautin said, “When we launched our first fund over 10 years ago, we had the ambition to become the pre-eminent fund for deeptech in the UK.
“Over the last few years, this sector has grown tremendously and produced a number of world-leading companies.
“We are seeing brilliant entrepreneurs bringing ever more experience and ambition to scale up their deeptech companies, so our latest fund will see even bigger successes.”
Stacey added, “Deeptech is increasingly being appreciated by investors and corporates alike, for its massive potential to disrupt and reconfigure industries.
“As one of the first investors focused on UK deeptech, we are delighted with the growth of UK expertise and ambition in the sector, and we anticipate it will continue to strengthen. In particular, the development of the tech ecosystem in Cambridge is quite unique, and we are proud to be right at the heart of it.”
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