The Bulgarian venture capital firm Eleven Ventures announces the first closing of its Eleven III fund that will manage capital of €60M, coming from a mix of private and institutional investors. Currently, the biggest part of the capital comes from around 60 individual private investors who are entrepreneurs and executives, most of whom are investors in the previous two funds. With the new fund, Eleven will aim to reinforce its position on the regional map and focus on supporting early-stage startups beyond the local ecosystem. With an investment term of 4-5 years and a lifecycle of 10 years, the fund will target five technology verticals – Fintech, Healthcare, Future of Food, Future of Work, and Ecomtech. This will differentiate Eleven from other regional early-stage funds that are usually industry agnostic.
The fundraising process, which started at the beginning of 2021, is expected to reach final closing by the end of this year. Earlier this year, the team of Eleven Ventures created a warehouse vehicle that invested on behalf of Eleven III. Therefore, all of the investments that Eleven Ventures has made since the beginning of this year, namely SuperOkay, ProductLead, Biopix, and BeMe, have been made via the warehouse vehicle mechanism.
More vertical focus for more value-added
Ivaylo Simov shares for The Recursive that the logic behind their decision to limit the investment focus to five verticals is based on the lessons learned that the team of Eleven has gained while managing their previous two funds.
“Our partnership with Visa and the focus that we have had on fintech startups during the past couple of years taught us that the more we focus on a particular vertical, the more value-added we offer to our portfolio founders. Additionally, we have come to realize that when we work with more companies from the same vertical, the synergies between them increase, which means that they can be of better support to each other”, Ivaylo Simov tells The Recursive.
Nikola Yanev, Marketing Manager of Eleven Ventures highlights that the fact they are starting a new fund gives their team an opportunity to scale the impact that they have managed to create over the past 9 years. “The value proposition of Eleven becomes even stronger and we now have a bigger network and more potential follow-on angel investors to join further rounds. Our everyday work continues to be focused on empowering local founders to build global companies. With the resources of the new fund our abilities to support local innovation multiplies,” Yanev says.
When it comes to the value proposition of the new fund and its positioning within the SEE ecosystem, Simov explains that they will continue to target pre-seed and seed-stage startups. This will differentiate them from the other cross-border regional funds that usually focus on post-seed investments.
Accelerated growth with more resources
Compared to their second fund, Eleven III will offer larger initial tickets of up to €1M and will provide more opportunities for follow-on investments. Portfolio companies will be able to close follow-on rounds between €2.5M and €3M, even though in individual cases the investments could reach up to €5-6M. With such a significant pool dedicated to follow-on investments, Eleven III will be able to support its portfolio companies all the way to Series A and Series B stages. As the investment opportunity and the size of the rounds grows, the team of Eleven explains that the percentage of equity may also increase to 15% from the previous 10-12%, but this will be decided on a case-by-case basis.
In terms of the investment strategy, Simov shares that capital will be equally allocated between the 5 verticals and that the team is expecting the main deal flow to come from Bulgaria, Romania, and Greece. The goal of Eleven III is to make around 7- 8 investments per year which means that by the end of 2021 they will invest in 3 or 4 more companies.
Impact in numbers and future plans
Since 2012, when the first fund of Eleven started operating in Bulgaria, the venture capital firm and its managing partners have supported over 150 startups with a total of €20M from its two funds and its public holding Eleven Capital. As a result, Eleven’s portfolio companies have attracted over €100M in follow-on investments.
Simov shares that the short-term plans ahead of the Eleven team include working on the final closing of the fund, which they expect to happen by the end of 2021, and continue their ongoing talks with potential investors. This will allow them to conclude the fundraising process and reach the target size of €60M.
As their team has grown to 14 people this year, Eleven is preparing to introduce more projects and partnerships. “We will try to replicate the model that we do with Visa and the Visa Innovation Program for fintech startups, in other verticals such as Healthcare and Future of Food,” Simov concludes.