TLcom Capital, a UK-based venture firm, has held a first closing of its second fund, TLcom II, in excess of €50 million ($75.4 million) eight years after closing its first vehicle.
The target size of the fund is €150 million and it is looking to invest in European, revenue-generating early stage technology.
Maurizio Caio, managing partner of TLcom Capital, said the firm had had to exit some investments and show progress in the portfolio before it could come back to market. The firm had held brief, preliminary discussions with investors a couple of years ago.
Caio said the perfect storm of the dotcom bubble had helped and hindered TLcom’s first fund and delayed a return to market. “It was partly about cleaning up the portfolio, but mostly it was about building up the portfolio. Because of the bubble we really didn’t start investing until 2002,” he said.
The post-bubble landscape meant there was less competition for assets and the companies which survived needed work, providing an opportunity for a hands-on firm such as TLcom keen to make its reputation. Caio said: “It is like a poker hand where you have to change four cards. Our best companies have needed a lot of work before they become obvious investment opportunities.”
One of the investments from the €138 million first fund epitomises this approach, Caio said. Media Lario was a high grade mirror maker on the shore of Lake Como in Italy which supplied telescope manufacturers. TLcom’s investment refocused the firm to supply the semiconductor industry. Intel Capital and Draper Fisher Jurvetson are now co-investors in the business.
Partly on the strength of this transformation Milan based-Finlombarda Gestioni, the investment arm of the development agency of Lombardy joined three other investors in the first close.
Caio said the regional fund had seen TLcom’s approach work at first hand, giving them the confidence to back his team despite a limited exit record.
“The best exits are still to come and there is only a subset of investors able to look at a portfolio and who have the ability and who are not scared of allocating time to due diligence.”
Finlombarda Gestioni joined the returning investors European Investment Fund and Access Capital Partners. The fourth group of limited partners is one associated with IDeA Alternative Investments. IDeA AI is an investment initiative recently launched by Italian mid-market firms Investitori Associati and Wise and DeAgostini, an Italian conglomerate increasingly diversifying away from its publishing roots into financial services.
IDeA Alternative Investments is building strategic presence through selected regional and sector focussed managers, and has picked TLcom as its international technology and venture capital platform. It has also taken a small stake in the management company according to Caio.
Lorenzo Pellicioli, chief executive of DeAgostini and chairman of IDeA said in a statement: “This investment marks an important step for IDeA towards the creation of a broad platform of independent specialist funds, as we aim to become a reference player in the alternative investment industry.”
TLcom expects to be in the market up to a year to raise the remainder. Caio said the calibre of the first close investors should encourage others.