Vienna-based Round2 Capital Partners, an investment firm that provides non-dilutive growth capital for leading European software and technology companies, announced that it has raised €62M in the first close of a €100M Software Lending fund.
The Round2 Capital Fund II investors include various family offices and institutional investors from Europe as well as the US. The European Investment Fund (EIF), which will have a representative on the governing board of the fund, is the anchor investor.
With this capital, the firm has expanded its total assets under management to €115M.
What to expect from Fund II?
The second fund focuses on expanding European B2B software providers with annual recurring revenues of €5M to €25M. With a target of €100M, Round2 Capital Fund II follows the same methodology as the company’s first fully funded software lending fund. Up to 40 small- and mid-cap software businesses will be financed by the second entity, which will focus on the DACH and Nordic markets.
Software firms can use Round2 Capital’s revenue-based fundraising method to convert their recurring revenues into flexible growth financing, which enables such companies to access capital without any dilution, loss of control, or onerous covenants.
In order to help its portfolio firms succeed in the critical stages of their growth to attain €50M ARR, Round2 Capital adopts a long-term perspective and works as an active partner with them. As of November 2022, Round2 Capital Fund I has no defaults and 4 exits.
The fund will be managed by Christian Czernich, Jan Hillered, Isabella Hermann-Schön and Stefan Nagel, who were responsible for managing the first vintage, as part of an expanding 11-person team running the Round2 Capital software lending platform.
Brief about Round2 Capital
Round2 Capital offers revenue-based funding solutions by which growth capital is provided in exchange for a small share of monthly revenues. The flexibility and non-dilutive nature of revenue-based financing is a “game-changer” for funding growth companies with recurring revenues.
In revenue-based financing, a firm receives funding in exchange for a share of its future revenue until a predefined absolute amount – the cap – is reached. The repayments in revenue-based finance are related to monthly revenue and automatically adjust to cash flows, going up when sales are high and down when revenues are poor, unlike the strict payback schedules of bank loans or venture debt instruments. As revenues rise, funding may readily be raised because no valuation is required.
Since its foundation in 2017, the firm has been active in several European countries, with a focus on Germany, Switzerland, Austria, Nordic countries, and the UK. To date, Round2 Capital has invested in more than 25 companies throughout 8 European jurisdictions.