Frontline Ventures raises $200M to assist B2B firms in Europe and US straddle the Atlantic

Europe’s resilience and long-term prospects in the face of the global investment slowdown could doubtless clarify why LPs are favoring transatlantic VC corporations today. Large Ventures in January closed two new funds totaling $250 million that it’ll spend money on startups on each side of the Atlantic, and right this moment, TechCrunch has discovered solely that Frontline Ventures has additionally raised $200 million throughout two funds, named Frontline Progress and Frontline Seed.

Frontline has traditionally invested in each Europe and North America, and its new funds will proceed to comply with that technique, betting on B2B software program firms. The brand new seed fund will favor European ventures, whereas the expansion fund will deal with U.S. startups.

The enterprise agency’s logic right here is that U.S. scaleups have a lot better odds at succeeding once they develop their operations to the opposite facet of the Atlantic. “Though it is a traditionally undervalued market, Europe accounts for over 30% of global revenues of top-performing B2B software companies at IPO,” Brennan O’Donnell, who will co-lead Frontline Progress with fellow accomplice Stephen McIntyre, mentioned in a press release.

“Traditionally undervalued” is a well-liked descriptor for Europe’s enterprise panorama, however issues aren’t as dangerous because the headlines appear to state when you cease evaluating latest funding tendencies to the growth instances of 2021 and early 2022. Europe, for instance, has seen enterprise funding decelerate considerably prior to now couple of years, however startups on the continent still raised more capital last year than they did back in 2019, in line with a report by regulation agency, Orrick. Certainly, Europe was the one main area to see funding ranges stay above pre-pandemic norms — Asia and North America each fared poorly by that metric.

O’Donnell and his companions at Frontline have been vocal about Europe’s worth for some time, and have even corroborated it with some research of their very own. Frontline basically needs to make sure that its U.S. firms don’t depart cash on the desk by not increasing to Europe when they need to, and, in line with O’Donnell, goals to assist startups straddle the pond by lending its experience when they’re able to develop.

Enlargement roadmap

O’Donnell advised TechCrunch that when it helps portfolio firms navigate growth to a different market, Frontline focuses on 4 facets: timing, go-to-market technique, expertise, and organizational design and site.

That’s by order of significance, and an organization’s location needs to be a by-product of the earlier three facets, O’Donnell mentioned. “Ultimately, location comes down to where your customers are and where the talent base that you need to effectively support those customers is.”

Frontline has already put this framework into motion over the previous few years, supporting portfolio firms like HR software program firm, Lattice, and compliance platform, Vanta, with increasing to Europe.

“Lattice expanded at a time when it wasn’t obvious,” O’Donnell defined. Though the corporate put its plan into motion through the pandemic, when folks nonetheless weren’t actively getting on planes, there was additionally a way that the 2020 dip wouldn’t final, he mentioned, including that there have been some tailwinds for HR tech. Quick-forward a couple of years, and that call proved “very successful.”

One of many pitfalls Frontline warns towards is “success amnesia”: Simply because an organization enjoys a sure stage of success within the U.S. doesn’t imply it is going to fare effectively in Europe, too, and not using a cautious technique.

“Vanta grew as quickly as it did during our first 18 months in Europe thanks to Frontline’s guidance,” mentioned Christina Cacioppo, co-founder and CEO of Vanta. “We tripled our customer base, quadrupled our team, and cemented Vanta as the market leader globally thanks to Brennan, Stephen and the Frontline team.”

In addition to its companions and places of work in London, Dublin, Palo Alto and New York Metropolis, Frontline has additionally constructed a group of executives within the Europe and Center East area to kind a community that its portfolio firms can faucet. “Over the last couple of years, we have pulled together a community for the top 200-250 VPs and GMs of EMEA, and we do regular events.”

Talking in regards to the agency’s present portfolio, O’Donnell mentioned that he anticipates an IPO inside the subsequent 18 months. In fact, it is going to take loads longer for its seed bets to succeed in the exit stage, however Frontline can also be eager to assist them transfer from one stage to the following.

Speaking of Frontline Seed, O’Donnell famous the agency has an “especially strong track record when it comes to helping companies raise their Series A.” Contemplating that pre-seed and seed investments haven’t slowed down as a lot as later levels, avoiding this bottleneck may very well be of worth to European startups hoping to change into transatlantic scaleups, or maybe even IPO candidates.