London-based VC firm Episode 1 has closed a £76M (nearly €88.72M) early-stage fund, including a £20M (nearly €23.34M) cornerstone commitment from British Patient Capital and the National Security Strategic Investment Fund.
This marks their third fund, empowering Episode 1 to support B2B software startups at pre-seed and seed stages, solidifying their position as a leading early-stage investor in the UK.
What to expect from the new fund?
Episode 1 aims to invest £250K to £3M in pre-seed and seed-stage startups. A substantial portion is earmarked for follow-on investments.
The plan is to make 10 to 15 yearly investments in UK-based software companies, emphasising AI, TechBio, open-source, software infrastructure, healthtech, and marketplaces.
The firm also reserves funds for follow-on investments and considers opportunities in the US and Europe with a UK presence. Deployment of the new fund has begun.
Hector Mason, General Partner at Episode 1, says, “This new fund, our biggest yet, is really a testament to the work of our portfolio founders who are building some of the fastest growing companies in Europe. It’s their tenacity, creativity, and vision which has enabled our fund to go from strength to strength and made this new fund possible.”
“As a team, we never sit still. This fund gives us the ability to double down on our team and the proprietary tech that’s got us to where we are today, as well as providing more firepower to invest in the next generation of extraordinary founders.”
In the future, Episode 1 aims to enhance its reputation for providing substantial value to founders and further develop operational excellence as the firm scales.
The targeted founder support includes deploying Episode 1 team members to assist startups in sourcing senior hires, optimising future fundraises for Series A rounds, and offering hands-on support at crucial stages in the startup journey.
Investors supporting the fund
The new fund sees over one-third of its Limited Partners (LPs) as former or current founders, including 21 of them having been previously backed by Episode 1.
Notable founder LPs include Alex Chesterman (Zoopla and Cazoo founder), Aidan Corbett (Wayflyer founder), Aron Gelbard (Bloom & Wild founder), and Alex MacDonald (Velocity Black and Sequel founder).
British Patient Capital is accompanied by various institutional investors, including listed VC firm Molten. Episode 1’s previous funds have consistently received support from the British Business Bank’s Enterprise Capital Fund.
Christine Hockley, Managing Director, Funds at British Patient Capital says, “Episode 1 has a track record of investing in UK B2B tech startups through a team of investment professionals with operational expertise.”
“We are pleased to partner with them in supporting the next generation of home-grown tech startups to scale into the leading businesses of tomorrow.”
The Episode 1 approach
Founded in 2013, Episode 1 is a VC fund comprising entrepreneurs, operators, and technologists with 20+ years of experience in the 0-1 journey, focusing on B2B software companies at pre-seed and seed stages.
The firm has invested in companies like Zoopla, Huboo, Carwow, Omnipresent, Betfair, Shazam, and Raft.
Episode 1 has backed 69 portfolio companies including Carwow, Huboo, CloudNC, Raft, Robin AI, Fatmap and Omnipresent, achieving a 73 per cent Series A graduation rate, three times the industry average.
The firm’s notable exits include Fatmap (acquired by Strava), Passfort (Moody’s), Feedr (Compass Group), Touch Surgery (Medtronic) and Atlas (Meta).
Episode 1 claims to have established market-leading ecosystem initiatives to facilitate venture access for first-time founders. Projects include Focal, an open-access demo day with 4,000+ annual applications, and Riding Unicorns, a podcast with thousands of downloads profiling 150 founders and investors, some of whom have become fund investors.
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