Many VC funds, especially recent vintages, have failed to return money to their investors. Swiss VC firm Redalpine is one exception, and this largely explains why its newly announced $200 million seventh early-stage fund was oversubscribed, according to the firm.
Redalpine Capital VII, or RAC VII, is already well under way to back 15 to 20 European early-stage companies, with nine investments so far, including German nuclear startup Proxima Fusion.
“We did a first close, and then we started to deploy the capital,” founding partner Michael Sidler told TechCrunch. That capital will also help it open an office in London.
Boasting consistent top quartile returns definitely helped Redalpine secure fresh funding. With over $1 billion in assets under management across its evergreen Summit Fund and its early-stage vehicles, the firm has built a large network of limited partners, enough of whom were willing to double down based on what they had seen. “We have recently calculated that over all of our seven funds, with very old and very young vintages, average net return over the last 10 years was 24% per annum,” Sidler said.
While some of these returns presumably come from being early backers of European fintech unicorns such as N26 and Taxfin, Redalpine’s investment thesis is more on point with current trends. Together with partner Peter Niederhauser, a software entrepreneur, Sidler cofounded Redalpine in 2006 with a focus on Europe and what they describe as the “continuum of software and science.”
In today’s parlance, you might call that European deep tech, and it’s the subject of several recent funds from Elaia, First Momentum, or IQ Capital, to name just a few. Europe’s university spinouts, in particular, make for coveted deal flow that can lure LPs.
Sidler acknowledges the trend, while pointing out Redalpine’s first-mover advantage. “Having these very dense networks with all of the universities and with the scientific community, and having all of these people with scientific backgrounds in physics, in medicine, in material science and biotechnology, that is a unique advantage for now, and to build it up takes a lot of time. These people who have experience as an entrepreneur, as an investor, and as a scientist, that’s an extremely rare breed,” he said.
Like previous vintages, though, RAC VII remains sector-agnostic, as Redalpine sees the opportunity to innovate in a broad range of sectors, such as energy, health and food. This breadth has also helped provide a buffer against market volatility. According to Sidler, its wide scope is one reason why Redalpine still managed to exit portfolio companies “in more difficult markets like 2022-2023.” As for 2024, “we managed to already harvest several exits from our still young fund VI and our Summit Fund,” Sidler said.
Sidler himself has a PhD in molecular biology, and he’s no exception at Redalpine. “50% of our investment professionals [have] a scientific or engineering background,” he said. This helps the firm “interact with scientific founders on eye level,” but it also provides operational support. He gave the example of medtech startup Aktiia, which Redalpine general partner Daniel Graf is helping expand internationally after playing “a significant role in hiring their new CEO.”
Graf is based in Silicon Valley, but Redalpine also has offices in Berlin and Zurich, and its upcoming London office will make it easier for Redalpine to “interact with the ecosystem there,” Sidler said. “We see more and more very interesting deal flow emerging out of the universities in and around London,” he explained.
University of Cambridge spinout ExpressionEdits is one example of the type of companies Redalpine is looking for in the U.K. Backed by RAC VII, it develops a computational gene editing platform that leverages AI to improve the effectiveness of therapies. “Humanity is currently at an inflection point in technological development, with AI and advancements in biotechnology driving this change,” Sidler told TechCrunch.
Source : Techcrunch
