Software VC Round2 Capital unleashes second fund, EIF participates as cornerstone investor

VC Round2 Capital has achieved an inaugural close for second fund, aiming to raise €100 million fund to provide loans to growth-stage software businesses.

The VC with branch offices in Stockholm, Berlin and Wien raised €62 million on the path to its €100 million target, and it's now preparing to find as many as 40 portfolio bets across Europe, especially in Nordic and DACH (Germany, Austria and Switzerland) markets.

Since it was founded in 2017, Round2 Capital has amassed 25+ portfolio companies in eight European markets on the back of its "revenue-based" credit financing policy.

Under the policy, software startups can leverage revenue to take up flexible debt from Round2 that in turn supports their growth plans, while avoiding equity dilution, loss of management control and restrictive term-sheet covenants.

By having access to loan facilities, Round2 says pre-€50 million ARR (annual recurring revenue) SaaS companies stand a better chance of overcoming growing pains in the make-or-break phases of development.

And the programme seems to be working; right now Round2's first fund hasn't suffered a single default, with four exits to its name.

Typically, Round2 backs startups in the €5-25 million ARR/year bracket. Portfolio highlights include Finnish startup Hoxhunt's gamified cybersecurity learning platform, and Switzerland-based luxury goods e-retailer Myprivate Boutique.

This second fund (anchored in Luxembourg) brings the VC's total assets-under-management to €115 million and has various European institutional investors and family offices invested, as well as LPs in the US.

Round2's anchor investor this time round is the EU-backed European Investment Fund, which will take representation on the fund's governance board.

It's the same management team from the first fund, but as part of an enlarged 11-person squad for vintage two.

CEO Christian Czernich, a 15-year veteran of European investment banking and private equity, joins fellow founder Jan Hillered (credits include West Africa-facing fintech Zuulu,) Isabella Hermann-Schön (an EIC accelerator expert jury member) and Stefan Nagel (owner of grain processing and exports business LTV).