EXCLUSIVE: Target Global is to deploy around £87m (€100m) from its £435m (€500m) venture fund for companies at late Series A and upwards in 2023, according to its founding partner.
It is also likely to deploy around £26m (€30m) from its seed fund in 2023 into technology start-ups across the UK and Europe, bringing its total deployment this year to €130m.
The global VC, which has offices in London, Berlin, Barcelona, Tel Aviv and Abu Dhabi, will invest up to £5m into companies from its seed fund and up to £10m in the first instance from its venture fund.
‘We’re on the cusp of another industrial revolution. AI is an inflection point that can transform the world.’Target Global founding partner Yaron Valler
Target Global invests predominantly in tech, though it has dabbled in sectors such as mobility as an experiment.
“As we’ve expanded the fund coverage to cover more of Europe and ultimately moving to the UK, we also expanded our areas we were investing in,” Valler told Growth Business. “We’ve tried to pick the best topics for each of the markets we’ve been in. In Germany, that was consumer-facing marketplaces. In the UK [that’s been] a lot of SaaS or fintech because it’s very prevalent here. In Israel, we did a lot of cybersecurity and databases.”
“When we launched our first seed fund, we did more B2B SaaS. In some cases, healthcare IT. We built a less eclectic portfolio.”
Current start-ups in the VC’s portfolio include London-based real estate start-up Plentific, which offers automation solutions to manage real estate operations.
Valler cites the VC’s ability to be proactive with its capital and technological background as the main factor why those high-growth companies have partnered with them.
“This is a high engagement business [and]one of the things I’m very critical of, in the run-up to the financial crisis we’re going through at the moment, is the fact that companies were not active,” he said. “VC is about investing in high-growth companies and enabling that growth… Anyone who is a passive investor is not a VC. A venture capitalist affects the outcome and not sit on the sidelines.
“We have a massive number of very senior advisors who we bring to bear, like the chairman of Siemens, Revolut and others and they will bring their ability to the table with us.
“[We also have] a deep understanding of technology,” he added. “That is especially important when you want to invest in something more innovative. You cannot invest in semiconductors without having a very deep understanding of what motivates semiconductor companies and what they do. Technology is the language we speak.”
Target Global finds itself in the tech landscape that has seen foreign investment fall by 23 per cent in the UK and venture capital firms holding more of their cash, resulting in tech companies seeing a 30 per cent drop in investment in Q4 last year.
“The deployment rate of our venture fund has slowed down,” he admitted. “We’re more careful about valuations, we’re looking for opportunities. We’re very conscious of the fact that, at the moment, cash is king. It’s better to slow down because as the market moves through the cycle, better opportunities will manifest and we’re already starting to see that.
“But this is not the first downcycle I have seen… I think we’re seeing more maturity this crisis. We’re seeing less hysteria, less knee-jerk reactions. If interest rate hikes stop some point soon, and we return to a bit more of a healthier market, and, at the same time, see a departure of asset managers who are not professional venture investors, in general we’ll be in better shape than we were a year or two ago.”
Despite this, Valler is optimistic for the future, not least with the acceleration of the technology on many investors’ lips: AI.
“We’re standing on the cusp of the biggest revolution the world has ever seen,” he said. “When I bought a book through what was the precursor to the internet, it was like magic. What I’m seeing now with AI is a million times more impressive.
“It’s very dangerous as well. But I think we’re on the cusp of another industrial revolution. If you look at venture capital, it’s a market of inflection points. Identifying these inflection points is what excites me in this business. This is an inflection point that can transform the world.”
What Target Global looks for in founders:
Tenacity: “Tenacity is more important than anything else. The former president of Israel was one of my founders. The reason he was such a good founder was because he had resilience. This guy was the most resilient guy I have ever met. He started a company and it didn’t work out, then the second and third and eventually he sold the fourth company and it finally worked out. The point is being resilient and decisive are probably more important than everything else.”
Know how to execute: “It’s not all about having good ideas – everyone has good ideas. It’s about how to execute it. It’s about having an idea, looking at a blank piece of paper and saying, ‘This is how I’m going to do it.’”
Need to be lucky: “There’s a joke that a recruiter takes a bundle of CVs, keeps the top 10 and throws away the rest saying, ‘I don’t want unlucky people’ – the truth is you need to be lucky.”
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