Despite growing European VC investment and the creation of 72 European unicorns in 2021, investment at the earliest stages has fallen, with pre-seed funding declining nearly 50% since 2016. According to the recent Atomico report of 2021, just over 1% of overall VC funding in Europe went to founding teams solely made up of ethnic minorities. Female founders also raised the lowest proportion of total capital since at least 2017.
Showing some light on the horizon, London-headquartered VC Octopus Ventures has rolled out its first pre-seed £10 million-fund to fill the growing gap in very early-stage funding for European founders. The all-female investment team is made up of Seedcamp and Uber alumni, Kirsten Connell and Maria Rotilu, who bring a unique level of insight and experience in growing businesses from their earliest days.
The fund is focusing on startups in the three Octopus Ventures specialist sectors – B2B software, fintech, and health. It will make investments of £100,000 and founders will be supported by Octopus Ventures’ established sector experts, its leading people and talent team, and a network of founders and advisors.
The team has already made its first wave of investments into 10 businesses across the U.K., Germany, and Spain. Of these, 40% have a female founder and 30% have at least one ethnic minority founder. These include Bea Fertility, Bloom Money, DudeChem, Paua, Visible, Volunteero, StockRx, Baselime, Luna and Flinco.
Kirsten Connell said: “In our first wave of investments, we’ve moved from first meet to term sheet in two weeks. As part of the portfolio, our founders are benefiting from access not just to sector experts from Octopus, but a network of more than 400 leaders who have walked in their shoes.”
Maria Rotilu added: “In our first wave, 40% of businesses have a female founder and 30% have at least one ethnic minority founder. We know we can increase the diversity of where we invest further, and we want to hear from female and under-represented founders with the next $1 billion idea.”
Alliott Cole, co-CEO of Octopus Ventures added: “Falling investment at the earliest stages of business growth is a long-term challenge for European businesses but, more than that, it’s a missed opportunity. By establishing a devoted fund and two of Europe’s best pre-seed investors leading it, we’re seizing that opportunity to back the businesses that will change the world, from day one.”