Formerly owned by Telekom, technology investor DTCP has raised a total of 450 million dollars in the final closing of its third growth equity fund and the first closing of an additional early stage fund focused on the B2B sector. The new growth fund, which has already invested in four companies offering AI-powered software solutions – Cognigy.AI, Cohere, Quantum Systems, and Anecdotes – raised capital in a „challenging market environment“ from new and existing investors including pension funds, corporations, and family offices, according to DTCP. Telekom remains a strong anchor investor in the new vehicle, „though its share of committed funds has now fallen below 50%“, Thomas Preuss, Managing Partner at DTCP, told Börsen-Zeitung.

The new fund builds on the strong track record of its predecessors launched in 2015 and 2018. These have already been fully repaid and, according to Preuss, achieved high net returns in the 15% to 20% range, which would be considered attractive within the industry. Meanwhile, the growth equity fund from 2018 is still running „for at least another four years, with the option to extend its duration if economically viable“, the manager added. He emphasises that the „existing portfolio continues to show high valuations.“

Regarding the newly closed vehicle, Preuss is cautious about return expectations. „We aim for an attractive return for our investors over the next decade's market environment“, he said. Given the new fund's strong focus on AI, relatively high valuations when purchasing portfolio companies will be reflected in eventual returns. „The broad market is certainly not at the valuations we saw in 2021“, noted Preuss. „Nevertheless, a wide dispersion can be observed. Leading, fast-growing companies today are achieving quite high valuations. And the more substantial and differentiated the actual contribution of AI to the company's performance, the higher the valuations that can be achieved in the current environment.“

With regard to exit strategies, Preuss acknowledges that „the exit market has been generally weaker over the past three years.“ Nonetheless, during this period, notable deals include Signavio and LeanIX, each sold for over 1 billion dollars to SAP.

„We do not rely on IPOs, but focus on rapidly growing, category-leading companies in acquisition-driven market segments, making M&A a more likely exit route“, explains Preuss. According to him, DTCP Growth has succeeded in 14 exits out of 36 investments so far, with only one being through an IPO, namely Fastly, the Edge Cloud platform listed on the New York Stock Exchange.

With the new growth vehicle, the firm aims to invest in approximately 15 to 20 companies, each typically receiving between 20 and 25 million dollars, targeting businesses in early or later growth stages, typically around Series B to D or late-stage financing rounds. The predecessor fund had invested approximately 408 million dollars in 33 B2B software companies across Europe, Israel, and the US.