Amadeus Capital Partners has held a $75 million first close on a new fund, which will make late stage venture and growth capital investments in technology businesses seeking to profit from growing demand in developing markets.
MTN, an African telecoms company, will be the cornerstone investor in Amadeus IV Digital Prosperity Fund, which is looking to raise about $150 million. MTN is currently the only LP in the fund, but Amadeus hopes to attract a similar level of commitments from institutional investors ahead of the fund close.
The new vehicle will invest in businesses that are developing online and mobile applications and services targeted at the emerging middle class in 19 developing markets, which span Africa, the Middle East, Latin America and Southeast Asia.
Andrea Traversone, the Amadeus partner leading the new fund, described it as “an evolution of what we've been doing over the last four to five years”. Developing markets have been accounting for an ever greater share of global technology spend, he said, with 20 of the firm's portfolio companies now active in these markets. “We've seen a shift in buying power towards developing markets – and that shift is particularly apparent in internet and mobile.” With mobile penetration increasing at a much faster rate in relative terms in developing markets – and becoming the primary way people in these markets access the internet – this is starting to translate into interesting innovation, he added. Amadeus will focus particularly on 'mobile-first' technologies that 'leapfrog' desktop applications.
The fund is unusual in that its geographical focus is purely on the demand side; the companies it backs may come from anywhere in the world. However, Amadeus managing partner Anne Glover said they would predominantly be based in developed markets. “The demand is global, it's not in the centres of innovation. But we can be the bridge between [those two].”
MTN had originally approached the firm about an Africa-focused fund, she said, but were persuaded by Amadeus to increase the scope. “We said: 'That's great – but to attract the leading companies globally and scout technology globally, it needs to be bigger than that'.” Bringing in other institutional investors would also help to create the “scale and independence [needed] to attract the best entrepreneurs,” she added.
Glover has spoken previously to PEI about the emergence of corporate venturing, and its importance to European venture at a time when poor historical performance still scares many large institutional investors away. But unlike the standard LP, this new breed wants much tighter, more focused mandates – like this one.
Traversone said Amadeus would look to make between 15 and 20 investments from the fund, depending on its eventual size, deploying anything from $5 million to $15 million per deal.