Written by Expon Capital
Double the size
Luxembourg-based Expon Capital has announced the first closing of its seed-stage fund with a target size of 20m EUR, double the size of its predecessor, to continue to back digital startups. The first closing, which took place a few days ago, was made with 14m euros thanks to historical investors as well as newcomers Cargolux, the Luxembourg Chamber of Commerce, Jean Orgonasi and Fabrice Couturier, entrepreneurs from the insurance industry, and other private investors. Additional investors have already committed and will join the fund soon.
A solid fund history
The Digital Tech Fund (”DTF”) is a family of seed funds (pre-seed and seed) managed by Expon Capital and backed by public and private shareholders (historical investors: SNCI, State of the Grand Duchy of Luxembourg, SES, Proximus, Post, High Capital, Arendt, UNI and BIL). The Fund’s purpose is to contribute to the creation of an effective start-up ecosystem in Luxembourg. In 2016, the fund’s first shareholders pledged 10m euros for each of the first two consecutive generations of 3 years, i.e. 20m euros in total.
A strong ambition
The ambition, well under way, is to double in size for this third generation of the DTF, thanks to the continued support of historical shareholders but also to the arrival of new investors, in order to strengthen the means available to companies in which the fund invests. The fund, which will be deployed over the next 3 years, intends to invest in 8-12 startups which plan to build substantial activities in Luxembourg. The Fund’s role is to help them grow from their seed phase to the scale-up phase. The initial ticket size will typically range from 200k euros to 800k euros for startups with initial proof of product-market fit.
The companies backed by the DTF created 312 new jobs so far, i.e. 3x more than at the time of the investment (from 155 at the time of the investment to 467 at the end of 2022) and are recruiting at least as many today, demonstrating an exponential acceleration of their needs.
This fund plays a crucial role in identifying and helping the most promising local start-ups succeed. The first two generations of the DTF are almost fully deployed, and, since Expon Capital’s intervention, the 13 portfolio companies have attracted just over €120m in capital to finance them. Each Euro invested in a start-up by the DTF has indeed made it possible to raise an additional 9 euros in equity so far to finance their development. As indicated by the twenty foreign funds who have invested in our portfolio companies, Expon Capital succeeded in putting Luxembourg on the European startup ecosystem map. This further suggests that some future European champions may already be incubated in our country.
While early-stage investments require a long-term horizon and patience, some of the portfolio companies have reached the scaling phase already with more good news to come in as the portfolio matures.
The Fund invested in Salonkee when it had only 60 salons as customers in December 2018. The Company grew very fast and now boasts thousands of customers across 5 countries. Salonkee just raised a 28m euros Series B growth round led by US growth equity firm, PeakSpan Capital.
Another example is Next Gate Tech which the Fund invested in, in December 2019, at a time when the Company had only one pilot customer. The Company is successfully reshaping the fund industry thanks to its highly powerful solution convincing a fast growing roster of marquee customers. In May this year, the Company announced an 8m EUR new Series A round led by Deutsche Börse.
In such a tough financing environment, these achievements are a real proof of the superb value creation generated by innovative Luxembourg startups. And it is just the beginning, the fund expects many more companies like Salonkee and NextGateTech to reach the scale-up phase in the future.