For Zurich-based Serpentine Ventures, a venture asset manager, Luxembourg is a key gateway to reaching international investors. The firm is leveraging the grand duchy’s regime for alternative investment funds for four of its venture capital funds that nurture Swiss startups.
Serpentine has recently begun raising funds for its newest fund, the Serpentine Growth Fund II. It is structured as a special limited partnership and is one of the new Reserved Alternative Investment Funds, known as Raifs, that Luxembourg’s business register added in September.
“The combination of the jurisdiction Luxembourg and Raifs is an ideal framework,” Maximilian Boelck (photo), the fund’s investment director, said in an interview. “The structure is a very professional regime for alternative funds, Luxembourg is a jurisdiction with clarity from a tax point-of-view and adheres to high standards for compliance and governance. It allows investors outside Switzerland interact with us in a very regulated way.”
Serpentine Ventures is part of the Swiss Ventures Group, a platform in Switzerland’s venture capital community that also includes firms like Code Law, offering legal advice to startups, and Getgoing, which offers CFO services on demand. Swiss startups attracted some 2.6 billion Swiss francs (2.75 billion euro) in capital during the first half of this year, industry data shows.
The Growth Fund expects to invest in some 15-20 companies during the investment period. Serpentine Ventures is a Finma licensed manager of collective assets.
Growing family
The Serpentine Growth Fund II is the latest member of a growing family of four existing Serpentine funds. According to its venture asset management approach, there are three life-cycle funds and a thematic fund – the Swiss Diabetes Venture Fund. The Growth Fund II is structured with a target size of 250 million Swiss franc and will invest in fast-growing companies that have reached proof-of-market. Boelck said the fund will be overweight on Swiss tech ventures, and the fund is expected to be open throughout the next year.
Investors wishing to participate face a minimum threshold of 250.000 Swiss francs, about double the minimum investment threshold of 125.000 euro for Raifs under Luxembourg law. The target investors are institutional investors, family offices, ultra high net worth individuals (UHNWI) and entrepreneurs.
Boelck explained that the threshold is also designed to enable investors to spread their participation among Serpentine’s other VC funds, which target for instance early-stage startups, such as in its pre-seed Rookie Fund I or next-stage (“seed to Series A financing”) companies via its Flagship Fund I, a Luxembourg Raif that the firm set up in September 2019.
The Growth Fund II expands this range, fuelling companies into the late stage with Series B, C and D financing, until their exit, on a high “high conviction” basis, said Boelck.
‘Outsized returns’
“The overarching goal is to deliver outsized returns to investors, the LP’s. At the same time, we deliver a risk-return profile that is de-risked compared to an early-stage VC, with companies that have a strong track record and are primed for growth,” Boelck said..
A key element to deliver upon the fund’s thesis, Boelck said, is the Swiss Venture Group’s strong access to its proprietary dealflow through the power of platform, including its already existing 40+ portfolio companies.