February 28, 2018 / 12:11 AM / 8 months ago

UK fund raises $110 million to invest in start-ups and share profits with founders

LONDON (Reuters) - Britain’s Kindred Capital has raised 80 million pounds ($110 million), making it one of Europe’s biggest “seed” funds that invest in start-up companies at their very earliest stages.

Kindred describes itself as an “equitable venture” fund because it shares its profits with its start-ups’ founders, a model it says is unique in Europe.

Seed funds are considered higher-risk than venture capital funds that invest in young companies in later fundraising rounds, but the rewards are seen as potentially higher.

Kindred’s “equitable” model means every entrepreneur backed by the firm becomes a co-owner of the fund, with 20 percent of the profits - after money has been returned to Kindred’s investors - shared among start-up founders.

“It resonates very well with the founders we’ve invested in so far, and makes a very strong statement that we understand what the founder journey is like, and we understand what motivates them,” Kindred partner Russell Buckley told Reuters.

Buckley, one of four founders of the fund, was previously an entrepreneur himself, co-founding mobile advertising firm AdMob, which was sold to Google for $750 million in 2010.

Kindred, which opened in 2015, has already deployed around 25 million pounds of the money raised on around 20 different investments, Buckley said. Start-ups backed by Kindred so far include FiveAI, which is building software for autonomous vehicles, and financial technology firm Paddle.

Buckley said the fund only invests in British start-ups, so Kindred can keep in close contact with their founders and build a Silicon Valley-like ecosystem. He said he did not see Brexit fundamentally changing Britain’s position as the main European hub for technology and venture capital funding.

“We don’t see any reason to be bearish at all at the moment,” he said. “The only issue we can see on the horizon is around immigration ... but I imagine that any government would recognise that and make allowances for the real talent who want to continue coming here.”

One on the fund’s biggest investors is British Business Investment, the commercial arm of state-owned development bank British Business Bank.

Buckley said other investors included a pension fund, as well as hedge funds and family offices, among others.

($1 = 0.7201 pounds)

Reporting by Jemima Kelly; Editing by Mark Potter

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