On Wednesday, London-based venture firm Felix Capital announced $300 million in funding, nearly doubling its managed assets to more than $600 million.
Felix Capital, which launched in 2015, largely invests in early-stage consumer businesses. So far, that’s included Goop, Highsnobiety, Peloton and Farfetch, among others. Also in its portfolio are B2B technologies that support these brands, like Yoobic, a mobile retail management platform.
Frederic Court, Felix Capital’s founder, talked to Glossy about many of the same things his team and advisers were discussing in the next room: the state of company’s portfolio, its next moves and the evolution of its processes amid rapid growth.
What goes into raising $300 million?
We have new and existing investors. It was a swift process, because, in many ways, it was more of the same. We’d talked to these investors before. The type of investors we have are very institutional: university endowments, foundations, family offices. These are people who think very long-term and are very sophisticated about venture. When we raised our first round, we went to them with our vision and what we planned to do. Some of them said, ‘This is interesting and you have a good track record, but we don’t typically invest in first-time funds. Go and execute, and then let’s keep a dialogue.’
In terms of doing what we said we were going to do — around portfolio construction, market positioning, team — we’ve done that and more. Knowing that investors, both existing and new, like to talk to entrepreneurs about what it means to work with Felix, we asked a few of our [brand’s founders] to be references for us. All of that worked to get investors on board.
So what about your investment approach did they find to be unique or interesting?
There are three types of companies we invest in and will continue to invest in: consumer brands with something distinctive, platforms, and tools and software. We invest in brands that have already shown evidence of having substance, whether in their community, their product, customer loyalty. We like to say we look for businesses that combine logic and magic. The magic is the impossible thing to predict or manufacture, and it provides the opportunity to acquire customers at basically no cost. Customers come to you organically because they just love your content or your aesthetic or the values you stand for.
We have a lot of people coming to us, saying, ‘You invest in celebrity-backed businesses. I’m working with so-and-so celebrity, and we want to launch this.’ That’s not what we do. We don’t work with Goop because Gwyneth [Paltrow] is a celebrity. We work with Goop because she built a very engaged community that’s meaningful and authentic, and has a specific aesthetic and view of beauty.
What does this round of founding mean for Felix?
We now have capital to invest at both early and late stages, both within our existing portfolio and outside of it. That gives us more flexibility. Obviously, the bulk of what we do is early [stage] — we don’t do a lot of seed-type investment, but it’s more Series A [investments]. We are a thematic investor, and we want to play our strategy at different stages.
What does this mean for the size of your team?
To have time to bring new companies into the Felix family, we’ll be adding at least two new hires this year, starting soon. We hope to tap into our existing community. They should be based in London but should be able to be quite active in the U.S., which is an important market for us. We are considering adding someone within the community-marketing ecosystem, so we can participate in more events, maybe create events, create more content — someone who can be more of a connector and support our portfolio companies by leveraging our network. We want to both keep our boutique style and to maintain the high level of support we give our brands.
We just hired a CFO and two new advisers: One is Andrew Robb, who I met in 2009 when I was just about to invest in Farfetch. I introduced him to [Farfetch founder] Jose Neves, when we decided he needed a COO. Andrew joined when Farfetch was a 15-person company. The other is Thijn Lamers of [payments platform] Adyen, who joined that company a few months in. He led all of its business development from 2007 to 2018, all the way to IPO. To have managed that kind of growth is an amazing skill set. It’s one of the key experiences we can share with the entrepreneurs we work with, because the successful ones will have growth to manage year over year. Every year is different and has its own challenges.
Do new advisers mean an expanded, new focus?
Yes and no. The way we make decisions is very open. We have one investment committee, and everybody participates, so it allows the younger members of the team to learn. In terms of [knowing] venture capital, it’s also a skill that you gain over time. Hopefully Felix can have a long life, through a new generation of investors.
We want to double down on our core themes, but we’re open to start thinking about areas where we see communities of interest and tribes being built around things that are not just around fashion and lifestyle.
Are there specific opportunities you see now?
We haven’t yet tackled a brand with a very strong heritage by relaunching it or working with to become a modern, digital-minded, direct-to-consumer business. That’s really interesting, especially if we can connect a European, French or Italian heritage brand to a global audience in the U.S. and Asia.
How would you describe your direction?
The level of ambition is growing, because we see the level of performance of the brands in the portfolio. There is an element of us wanting to do more of the same, but better — to stay humble, but raise the bar. We want to continue to be relevant to U.S.-based companies, especially in New York and LA. And hopefully we can start working with brands that have a global opportunity, just like Farfetch did.