K Fund, the Madrid-based venture capital firm, today announces the first closing of its new investment vehicle, Leadwind, which will invest in early-growth startups in Southern Europe and Latin America.
The new fund targets €250 million, which would make it the largest growth fund in southern Europe. It has committed 175 million euros from sponsors such as Telefónica, BBVA, SATEC and Global Ominum, through its fund GoHub. In addition to helping European companies expand to Latin America, it will also help Latin American startups looking to grow in Europe.
Leadwind will issue checks starting at €5 million, investing in companies with a valuation of €40 million or more. In addition to the size of the investments (K Fund’s two previous investment vehicles made investments between €100,000 and €2 million), the new fund marks a change in focus for the company, reflecting a broader trend in the investment sector. emerging companies from southern Europe.
“I would not invest in companies that build a blockchain, but in companies that can use the blockchain as a service”
While K Fund’s first two funds were generalists, Leadwind will specifically look to support B2B startups with a deep tech component.
“The thesis is different,” Miguel Arias, a partner at Leadwind, tells Sifted. “K1 and K2 [K Fund’s first two funds] they were very generic in their approach to technologies and business models. Here we look more at the Internet of Things, AI, data and blockchain as platforms.”
The shallows of deeptech
By “like platforms,” Arias tells Sifted he means startups that will allow other companies to integrate technologies like AI and blockchain into their workflow: “I wouldn’t invest in companies that build a blockchain, but in companies that can use blockchain as a service that can be applied to many different business models.”
Arias gives the hypothetical example of a company that has created a digital ID solution using blockchain technology, which could be useful to a wide range of other companies that might not have the deep tech skills to create one on their own.
“What we have seen is that there is a lot of talent in this area, on the deeptech type of surface. There is a growing maturity, both in terms of technological and entrepreneurial talent, around these types of companies in southern Europe and increasingly in Latin America”, he says.
Arias points to data analytics companies like TinyBird (which recently raised Spain’s largest Series A round) and Seqera Labs, as examples of this shift. Other recent deeptech success stories in Spain include startup of quantum computing multiverse computing Y neural interface developer in the brain
It will be music to the ears of many people who follow the technology sector in southern Europe, which is still shedding the reputation of some a forbidden zone to build deep tech companies.
It’s a reputation that, according to Arias, had some truth to it, until now. “We always had the talent in the universities, but the transfer of technology was not happening. There was a real blockade there. But now there are more scientists and engineers who see that they can access seed funding, which is a new thing that happened five years ago,” she says.
the power of the people
The Leadwind team also includes Sergio Álvarez, co-founder of spatial data company Carto, and Borja Santos, former country manager for Spain and Portugal at payments company Stripe.
Arias says Santos’ experience of leading international expansions in Europe will be particularly useful as the fund plans to back Latin American companies looking to grow on the continent.
“It’s something new, now companies in LatAm are mature and have enough financial power and sophistication to be able to move to Europe, and we want to help there,” he says.
“The region is ready and it is booming. And if you’re not here, you’re probably already late for the party.”
Leadwind will have a dedicated investment team working from São Paulo, and Arias says the fund will also use Telefónica and BBVA’s networks in those countries to help generate deal flows.
Working with large corporate LPs like these also helps inform Leadwind’s broader investment thesis, as Arias believes they will provide a route to market for the fund’s B2B companies: “We’re investing in enabling technologies, which makes the angle to have companies associated with us and become even more attractive channels for our companies”.
Arias believes all of this will come in handy in places that become increasingly competitive for investors, as funding volumes grow and the world pays more attention to lesser-known tech hubs.
“The region is ready and it is booming. And if you’re not here, you’re probably already late for the party,” she says.
Tim Smith is the Iberia correspondent for Sifted. He tweets from @timmpsmith