Frontline Ventures raises $200 million to help B2B companies in Europe and the US across the Atlantic

Europe’s resilience and long-term prospects in the face of a global investment slowdown likely explain why LPs are favoring transatlantic venture capital firms these days. Giant Ventures in January closed two new funds totaling $250 million that it will invest in startups on both sides of the Atlantic, and today, TechCrunch has exclusively learned that Frontline Ventures has also raised $200 million across two funds, called Frontline Growth and Frontline Seed.

Frontline has historically invested in both Europe and North America, and its new funds will continue to follow this strategy, betting on B2B software companies. The new seed fund will favor European projects, while the growth fund will focus on American startups.

The venture firm’s logic here is that American startups have a much better chance of success when they expand their operations to the other side of the Atlantic. “While it is a traditionally undervalued market, it represents more than 30% of global revenue for the best-performing B2B software companies going public,” said Brennan O’Donnell, who will co-lead Frontline Growth with partner Stephen McIntyre. statement.

“Traditionally undervalued” is a common description of Europe’s venture landscape, but things are not as bad as the headlines seem to suggest once you stop comparing recent investment trends to the boom times of 2021 and early 2022. Europe, e.g. , venture investment has slowed significantly in the past two years, but startups on the continent still raised more capital last year than they did in 2019, according to a report by law firm Orrick. In fact, Europe was the only major region to see investment levels remain above pre-pandemic norms – and Asia and North America performed poorly by this measure.

O’Donnell and his partners at Frontline have been vocal about the value of Europe for some time, and have even emphasized it by… Some research Their own. Frontline essentially wants to make sure its U.S. companies don’t leave money on the table by not expanding into Europe when they should, and aims, according to O’Donnell, to help startups cross the pond by offering their expertise when they’re ready to. broadens.

Expansion roadmap

O’Donnell told TechCrunch that when helping portfolio companies move into another market, Frontline focuses on four aspects: timing, go-to-market strategy, talent, organizational design and location.

In order of importance, O’Donnell said, the company’s positioning should be derived from the previous three aspects. “Ultimately, location depends on where your customers are located and the talent base you need to effectively support those customers.”

Frontline has already been putting this framework into practice over the past few years, supporting portfolio companies such as HR software company, Lattice, and compliance platform, Vanta, with expansion into Europe.

“The network expanded at a time when it was not clear,” O’Donnell explained. Although the company put its plan into action during the pandemic, when people were still not actively boarding planes, there was also a sense that the decline in 2020 would not continue, he said, adding that there were some HR Tech tailwinds. A few years later, this decision proved to be “very successful.”

One pitfall that Frontline warns of is “success memory loss”: just because a company has a certain level of success in the US does not mean it will do well in Europe as well, without a careful strategy.

“Vanta has grown as quickly as it did during our first 18 months in Europe thanks to Frontline’s guidance,” said Cristina Cacioppo, co-founder and CEO of Fanta. “We have tripled our customer base, quadrupled our team, and strengthened Fanta’s position as a global market leader thanks to Brennan, Stephen, and the Frontline team.”

Alongside its partners and offices in London, Dublin, Palo Alto and New York City, Frontline has also built a community of executives in the EMEA region to form a network that its portfolio companies can leverage. “Over the past two years, we have brought together a community of the top 200 to 250 vice presidents and general managers in EMEA, and we organize regular events.”

Speaking about the company’s current portfolio, O’Donnell said he expects an IPO within the next 18 months. Of course, it will take much longer for their initial bets to reach the exit stage, but Frontline is also keen to help them move from one stage to the next.

Speaking about Frontline Seed, O’Donnell noted that the company has a “particularly strong track record when it comes to helping companies raise their Series A.” Given that pre-seed and seed investments have not slowed as much as later-stage investments, avoiding this bottleneck could be valuable for European startups hoping to become transatlantic scale-ups, or perhaps even IPO candidates.