Episode 1, a London-based venture capital firm, has successfully closed an €88.8 million early-stage fund to support B2B innovators. The fund includes a €23.3 million cornerstone commitment from British Patient Capital and the National Security Strategic Investment Fund. This latest fund marks Episode 1’s third and will enable the firm to back the next generation of early-stage B2B innovators, solidifying their reputation as the UK’s most innovative early-stage investor.
Since its launch in 2013, Episode 1 has invested in over 69 portfolio companies, including Carwow, Huboo, CloudNC, Raft, Robin AI, Fatmap, and Omnipresent. Impressively, 73% of the portfolio companies from their previous fund have gone on to raise a Series A, which is approximately three times higher than the average pre-seed and seed graduation rate. The firm has also overseen notable exits such as Fatmap, Passfort, Feedr, Touch Surgery, and Atlas.
With the €88.8 million fund, Episode 1 will make investments ranging from £250k to £3 million in pre-seed and seed-stage startups, with a significant portion allocated for follow-on investments. The firm aims to make 10 to 15 investments per year in software-led companies primarily operating in the UK, focusing on key areas such as AI, TechBio, open-source, software infrastructure, healthtech, and marketplaces. Additionally, some allocation will be available for US and European-based companies with a UK presence. The firm has already started deploying capital from the fund.
Hector Mason, General Partner at Episode 1, expressed his gratitude for the portfolio founders who have contributed to the firm’s success and made this new fund possible. He highlighted the founders’ tenacity, creativity, and vision as the driving force behind Episode 1’s growth. Mason also emphasized the firm’s commitment to continuous improvement and using the fund to strengthen the team and invest in the next generation of exceptional founders.
One notable aspect of the new fund is the participation of former or current founders as limited partners (LPs). Over one-third of the fund’s LPs are founders, including 21 founders previously backed by Episode 1. Prominent founder LPs include Alex Chesterman, founder of Zoopla and Cazoo, Aidan Corbett, founder of Wayflyer, Aron Gelbard, founder of Bloom & Wild, and Alex MacDonald, founder of Velocity Black and Sequel. This demonstrates the strong support and trust Episode 1 has garnered within the founder community.
Institutional investors, including British Patient Capital and VC firm Molten, have joined forces to back Episode 1’s latest fund. The British Business Bank’s Enterprise Capital Fund has also backed the firm’s previous funds.
Christine Hockley, Managing Director of Funds at British Patient Capital, highlighted Episode 1’s track record of investing in UK B2B tech startups and the team’s operational expertise. She expressed pleasure in partnering with the firm to support the growth of homegrown tech startups, helping them become the leading businesses of tomorrow.
Moving forward, Episode 1 aims to further enhance its reputation for providing genuine value to founders while building operational excellence across the firm. The firm offers targeted founder support, such as assisting in sourcing senior hires, optimizing future fundraises for successful Series A rounds, and offering hands-on support throughout the startup journey.
The Episode 1 team, which includes two colleagues with PhDs in AI, has developed proprietary, data-driven deal-sourcing tools that identify promising founder talent early on. Many of the leads discovered through these tools have their first interaction with Episode 1. Additionally, the recent hire of CFO Steph Orde has streamlined and automated back-end processes, enabling the investment team to focus more on their portfolio rather than administrative tasks.
Episode 1 has also launched market-leading ecosystem initiatives aimed at providing access to venture capital for first-time founders and demystifying the fundraising process. Its initiatives include Focal, an open access demo day that receives thousands of applications per year from startups seeking to pitch to potential investors, and Riding Unicorns, a popular podcast with hundreds of thousands of downloads. Both initiatives help connect founders and investors, with many guest speakers on the podcast becoming investors in the fund.
With their latest fund, Episode 1 is poised to continue their significant impact on the early-stage investment landscape. Backed by experienced founders and institutional investors, they are well-positioned to support the next wave of B2B innovators in the UK and beyond.
