Molten Ventures has raised £175 million for a new fund aimed at a part of the startup market that can be surprisingly difficult to finance: companies that have made it through the early years and now need serious money to grow.
The London-listed venture capital firm said on Monday that the first close of its new Growth Fund includes £75 million from the British Business Bank and £100 million from Molten. The fund could eventually reach £350 million.
It will invest mainly in Series B and later-stage companies, with a focus on sectors including artificial intelligence, space, fintech, quantum technology, deeptech and hardware.
For founders, that is an important stage of a company’s life. By the time a business reaches a Series B, it has normally raised several rounds of funding and has something to show for it. The problem is that scaling from there can require considerably more capital.
Molten is positioning itself as a specialist in that part of the journey. The firm has been investing in European technology companies for more than 20 years and says it has put more than £700 million into over 40 growth deals during the past decade.
Its portfolio includes some of Europe’s best-known technology businesses, among them Revolut, Wise, Trustpilot and UiPath.
The new fund comes as investors and policymakers continue to worry about the shortage of growth capital available to British technology companies. Britain has built a strong startup scene, but there is a noticeable difference between producing a successful young company and giving it enough financial backing to become a large one.
That gap can become particularly obvious when companies start raising larger rounds. US investors have access to deeper pools of capital, and American funds have become important backers of European companies looking for rapid expansion.
Molten’s new fund is intended to give founders another option. Ben Wilkinson, the firm’s chief executive, said the company sees “exceptional founders and businesses” across Britain and Europe but believes many need more capital to become global leaders.
The British Business Bank is putting its own money behind that argument. Its £75 million commitment is designed to increase the amount of growth funding available to British companies and encourage other investors to put money into the sector.
The bank has invested alongside Molten since 2018. Previous investments have included SatVu, a satellite imaging company; Thought Machine, which develops banking technology; and Paragraf, a semiconductor business.
For the founders raising money at this stage, the difference between securing a large round and coming up short can be substantial. A company may be planning to enter the US, expand its engineering team or increase production, and suddenly find that the amount required is far beyond the kind of funding it needed when it was getting started.
That is why later-stage investment matters to the UK’s ambitions to build large technology companies. A startup can have a good product and a growing customer base and still struggle to finance the next few years of expansion.
There is a broader issue here too. When a European startup needs a much larger investor, it can become attractive to overseas buyers. An acquisition isn’t necessarily a bad outcome for founders or investors, but it can mean that ownership, jobs and future investment decisions increasingly sit outside the UK.
Molten’s growth fund is, in part, a response to that problem. The firm manages more than £2 billion and has been increasing its focus on later-stage investment. The new fund gives it a larger pool of capital to deploy into companies that have already demonstrated that there is a business behind the technology.
For the British Business Bank, the hope is that its £75 million will help bring additional private money into the market.
And for the founders Molten wants to back, the proposition is fairly simple: if the company is working and the next stage is within reach, there should be enough capital available to have a proper shot at it.
Whether the fund reaches its eventual £350 million target, and how many companies go on to become the next Revolut or Wise, will take rather longer to find out.
