Dublin and London-based venture capital firm Frontline Ventures has raised $200 million for two funds to help business-to-business software companies targeting the transatlantic market.
The funding will be split between the two funds, Frontline Seed and Frontline Growth, and are backed by Limited Partners EIF and ISIF, with a number of other investors also participating. The seed fund targets early stage companies around Europe, including Ireland; Frontline Growth invests in later stage companies in the US, with B2B software and international expansion the common threads tying both together.
With the US and Europe making up a significant proportion of both global software spending and global venture capital money, Frontline says its corridor between US and Europe can provide a vital resource for seed and growth-stage companies hoping to grow internationally.
“What we’ve found was that typical software companies at the point of IPO have 25 to 30 per cent of their global revenue coming from Europe,” said Frontline’s Stephen McIntyre. “In B2B software, and software in general, the US and Europe are by far the biggest markets. The US market is number one, but for any company that wants to be to go public, for example, it’s kind of about ‘how big can you get?’ It’s not it’s not just about can you be successful in the US; the kind of companies that we invest in, and the stage that we invest at, they’re already successful in the US. The only question is, can they become a standalone public company? And to do that, they need to fulfill a global potential.”
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Aimed at European start-ups, the seed fund led by Will Prendergast, Zoe Chambers and William McQuillan has invested in more than 80 European companies in the past 10 years, with portfolio companies that include Signal AI, Finbourne and Insify. Workvivo, Pointy, Qualio and Brightflag.
Investments are typically between €500,000 and €2 million, and the seed fund expects to use its share of the funding over the next two to four years, depending on the market.
“Frontline Seed’s mission over the past decade has been to help ambitious founders capture this critical transatlantic market and set them on the path to IPO,” said Mr Prendergast, partner at Frontline Seed.
“This has led us to become an integral partner for the highest-potential B2B software businesses in Europe, who we support through our network on everything from fundraising to their US go to market. Our success is demonstrated by the high proportion of our portfolio companies that have graduated to Series A and expanded into the US market – with more yet to come.”
The growth fund, meanwhile, has supported companies in North America at Series B and C level who want to establish themselves in Europe.
Writing larger cheques of up to €5 million, the latest round of funding could invest in 15 or 16 companies there.
In the five years it has been active, the fund has backed more than a dozen companies, including MosaicML, Lattice, Vanta, Attentive and Navan, and is led by Brennan O’Donnell and Mr McIntyre. The investment fund said it is expecting its first IPO in the coming 18 months.
“Though it is a traditionally overlooked market by US entrepreneurs, Europe accounts for over 30 per cent of the global revenues of top performing B2B software companies at IPO,” says Mr O’Donnell. “Our goal at Frontline is to bridge the gap between the U.S. and European markets, providing a platform for B2B software companies to become global category leaders.”
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