Cathay Innovation raises €1B third fund
- Ryan Lawler, author of Axios Pro: Fintech Deals
Illustration: Shoshana Gordon/Axios
Global VC firm Cathay Innovation has announced its third fund, a €1 billion vehicle to invest in startups across the fintech, e-commerce, digital health, and enterprise software categories.
Why it matters: Cathay’s unique strategy is to partner with Fortune 500 companies rather than institutional LPs. That approach has paid off lately, given the drying up of venture funds.
Details: The latest fund follows a €650 million Fund II that the firm announced in 2020, which was more than double the size of its first fund.
- Since its inception, the firm has made over 120 investments, including backing fintech and crypto startups such as Chime, Ledger and ZenBusiness.
Between the lines: Cathay Innovation is backed by a number of multinational corporate investors — many of whom look to Cathay to connect them with startups.
- "We had the idea to get corporates on board [and] proposed to Fortune 500 companies to invest in the Fund and have a very deep open innovation partnership with us," Cathay Capital managing partner Denis Barrier tells Ryan.
- LPs include Fortune 500 firms such as Sanofi, TotalEnergies, Valeo, BNP Paribas Cardif, Groupe SEB and Groupe ADP (Paris Aéroport).
The intrigue: In addition to its main fund, the firm has also been rolling out industry-specific joint venture funds, including the crypto-focused Ledger Cathay Capital fund, C. Entrepreneurs insurtech fund with BNP Paribas Cardif, and Cathay Smart Energy climate tech fund with Total.
- Those funds operate primarily at the seed stage, whereas Cathay Innovation comes in later — typically at late Series A or Series B rounds, Barrier says.