Highland Europe goes big with fifth growth fund

The €1bn fund is 43% bigger than its predecessor.

European venture capital firm Highland Europe has closed its fifth fund at €1 billion to continue its strategy of backing European growth-stage software and consumer internet companies.

The new vehicle is about 43 percent bigger than its previous fund, which closed on €700 million in 2020.

“Current market conditions are not easy, but our founder-led companies continue to scale impressively and efficiently, with several world-leaders in the mix,” Highland Europe Partner Fergal Mullen said in a blog post. “We’re pleased that our investors share our conviction and thank them for their continued trust.”

The London-based firm did not disclose the names of investors. At least two of the LPs are Canada public pension fund CPP Investments and investment company Private Equity Holding AG, according to VCJ affiliate title Private Equity International.

The new fund comes at an opportune time for Highland, as valuations for European tech companies have come down recently and venture firms have slowed their pace of investment in European start-ups.

VC firm Atomico’s 2022 State of European Tech Report said that 8 in 10 European entrepreneurs surveyed said fundraising became harder in 2022, compared with less than 20 percent who felt that way in 2021, Venture Capital Journal previously reported.

Despite the slowdown, most market participants remain bullish about Europe’s long-term prospects. “Almost eight in 10 people [77 percent] who took our survey say they’re more or just as optimistic about the future of European tech as last year,” Atomico partner Tom Wehmeier said in a webinar about the report.

Highland, which spun out of US-based Highland Capital Partners in 2012, raised $341 billion for its first growth fund.

The firm’s investments include Adjust, AMCS, Camunda, ContentSquare, Descartes, Deepki, eGym and Featurespace.

In addition to announcing the new fund, Highland said it promoted David Blyghton to partner. He joined the firm in 2014.