Two big equity funds broke through the gate this week. Earlier this year, we covered how Liquidity Group, a growth-stage debt lender, raised $40 million and launched a $250 million debt fund for tech firms. Backers included MUFG and Apollo.
The beauty of liquidity is awe-inspiring. It's part of a platform and part lender, using its technology to make decisions about deploying debt facilities and other financial solutions from $5 million to $100 million. The company says its processes are relatively faster than more conventional approaches.
The plan also runs a $250 million debt fund to provide growth financing to late-stage tech companies and mid-market companies.
Now, the two venture capitalists, MUFG and Liquidity, are banding together to launch five non-dilutive funds under Mars. This is the first equity fund, powered by the same technology referred to above, and is targeted at late/growth-stage companies. Dragon Fund and Mars Growth Capital are both based in Singapore and the venture seeks equity investments in APAC.
He will make private, mid-stage to late-stage tech and tech-enabled companies, starting with the Asia-Pacific region. The deal sizes range from $20 million to $100 million. MUFG is also extending its capital commitments to Mars growth capital's non-dilutive funds fund from $750 million to $1 billion.
This week, Dawn Capital, one of Europe's larger specialist B2B software VCs, raised $700 million to invest. The move was more significant news for early-stage companies.
The $620 million Dawn V was aimed at Series A and B stages, with initial investment of $10 million to $40 million, and enough capital for follow-on rounds. Dawn Opportunities III will be an $80 million follow-on fund, later-stage fund aimed at Series C stage onwards.
To date, Dawn has invested in Tink, LeanIX, Mimcast, iZettle, Tink, LeanIX and, more recently, Collibra, Dataiku and Quantexa, all unicorns.
What are we going to make of the arrival of such funds?
Here are some observations you might like to mull over.
Firstly - and that is what I'm hearing at the private dinners and drinks events amongst VCs in London, for example - late-stage capital to bolster pro-IPO companies is coming back.
Most analysts already know that the last quarter of this year is going to be flat. However, it will now become a key marketing period for late-stage and growth funds to get into companies waiting for markets to bounce back in Q1/Q2 of next year. Hence, liquidity coming out of the gate with the above. Secondly, pure, early-stage VC funds like Dawn, who have a deep bench in deep tech, are quite happy to be raising and deploying funds at ab early stage right now. It will take at least a few years for those bets to mature, and with valuations down, early-stage VCs with new funds this year are getting far better deals than the ones that were deployed in 2021 and 2022. The generative AI booms will also suck up a lot of that early-stage capital.
So there are at least some explanations as to why these larger funds are appearing in what, outwardly, appears to be a down/flat market for startups right now.