Sova VC, the London-based venture capitalist which launched in December, is zeroing in on early-stage B2B marketplaces from now on.
Now it has reined in its ambitions, making investments of anything between £500,000 and £1.5m in early-stage tech companies, although it may make follow-on rounds.
Partly this is because it has adopted a more hands-on approach with its investments, helping its second portfolio company Laundryheap open in Dubai. Sova VC has invested £2m at Series a stage.
Alex Chikunov, partner at Sova VC, said: ““We thought, what can we do to help these businesses to scale? From that point, I realised that we could be hands-on with these companies and help them grow and develop. Business development had to become the main thing.”
Two other investments are backing Geomiq, a marketplace for precision, low-volume manufacturing, to the tune of £500,000 – Chikunov defines Geomiq as an “operating system for engineers” – and a similar £500,000 investment in subscription-based nutritional supplements brand Feel, which Chikunov cheerfully admits isn’t a B2B marketplace at all but was a business he understood because he was an early investor in Simply Cook, recently bought by French food giant Danone.
That said, Chikunov is passionate about B2B marketplaces, where businesses, not consumers, can buy, which he believes are years behind B2C counterparts. Any vertical business, from diamonds to timber, is ripe for disruption by a digital B2B marketplace. The biggest problem, he says, is a legacy way of doing things with buyers still using pen and paper for inventory – although Covid has accelerated the change, as it has for so many other things.
Chikunov said: “I realised there a huge and massive opportunity in the B2B marketplace space. There are so many vertical industries that need their own digital marketplace.”
Supported by an initial £20m investment from parent company, London-based institutional investor Sova Capital, Sova VC plans to make between two and three investments each year, eventually growing a portfolio of around 15 companies.
“Sova Capital offered me the opportunity to build Sova VC from scratch in the B2B trading marketplace space, giving me the opportunity to structure a VC on my own,” said Chikunov.
Chikunov first started talking to Sova Capital about it investing in his old employer Moscow-based VC Maxfield Capital, where he helped identify investments in, among others, concierge service Houst, office search engine HubbleHQ and commercial interior design solution Homewings. Sova Capital told Chikunov it was more interested in supporting his B2B marketplaces investment idea.
Sova Capital has $4bn of client money from corporate investors under management along with $500m of its own assets.