The venture firm LETA Capital closes today the investment period of its second fund LETA Capital Fund II and announces the beginning of the investment period of the third $100M LETA Capital Fund III. Its main focus remains the same — Russian-speaking entrepreneurs building global startups with international revenue. We sum up the results of the previous investment period and start the new one.
Out of the $50M Fund II we have already invested $34.4M in 16 startups, the rest is reserved for follow-on investments. The companies showing the greatest dynamics at the moment are inDriver and Novakid. inDriver at the beginning of 2021 raised $150M from the world tier-1 investment funds — Insight Partners (the leading investor), Bond Capital and General Catalyst. The company’s valuation at the end of the round reached $1.230Bn. Prior to that, in February 2020, the company closed a $72M round, in which Bond Capital was the lead investor, with an estimate of $472M. Novakid, an online English language learning platform for children, raised $35M in August 2021, the leading investors were the Owl Ventures, an EdTech-focused fund (investors in MasterClass and Quizlet), and Goodwater Capital (investors in Twitter and Spotify). Our portfolio startup Weezmo was acquired by the public company Nayax Ltd. (TASE: NYAX), a leading Israel provider of cashless solutions. Leta Capital Fund II was a lead investor in the previous round, investing $1.5M in 2018. Tomer Dean the founder of Bllush closed the company. This investment was written off.
The fund’s lifecycle ends in 2026. During this period our venture firm intends to sell its portfolio companies and maximize returns to fund’s LPs. The current dynamics of the portfolio shows that the strategy was chosen correctly. LETA Capital invests in Russian-speaking tech entrepreneurs building global businesses. We prefer to invest in promising startups with a sustainable business model and high margins. We developed the search method for such companies for more than 5 years.
We intend to skick to our previous investment focus in the new fund. $100M fund will be allocated in the Russian-speaking entrepreneurs’ companies with international sales and scaling potential. $20M is a GP commitment.
According to the strategy, we plan to invest 60% in B2B-software startups, 30% — in B2C-software, 10% — in innovations beyond the horizon. The fund is focused on IT solutions for various sectors, based on deep R&D, mainly in the B2B area, which can make the existing market more efficient or even fundamentally change it, for example, business analytics, big data analysis, AI technologies, optimization and automation of processes, business robotization (logistics, production, etc.). According to the recently published KPMG Q3'21 Venture Pulse Report, B2B services will show a significant increase in fundraising perspectives.
The investment criteria are slightly different from the second fund approach: the fund is focused on companies at growth stages with more than $50k/mo international Net Revenue (outside CIS) or more than $600K in Annual Booked Net Revenue, with more than 2xYoY business metrics growth rate. Average check — $2-$5M. LETA Capital plans to lead deals, leaving 25–50% of the round for co-investors. The investment period of LETA Capital Fund III is 3 years, the management period is 5 years.
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