London VC Kindred Capital to share fund profits with founders
London-based seed venture capital firm Kindred Capital is closing its first £80 million fund with a unique "equitable venture" model. The firm will give the founders it backs a share of the fund's profits. This approach is designed to better align incentives between investors and the entrepreneurs in the firm's portfolio.
- Under Kindred's "equitable venture" model, 20% of the fund's carry (the profits) is shared among the founders of their portfolio companies, who are collectively treated as a fifth partner in the fund. - Since the initial £80 million fund, Kindred has raised subsequent funds, including an £81 million Fund II and a $130 million Fund III, with British Patient Capital being a recurring limited partner. - The model was pioneered by the firm's partners, including co-founder Leila Zegna, who have prior experience as founders and operators, with the goal of creating the venture firm they would have wanted to work with. - The collaborative approach has influenced deal flow, with portfolio founders sourcing nearly 60% of the firm's investments. - For its first fund, Kindred projected that approximately £5 million would be returned to founders, and 54% of its portfolio companies went on to raise Series A funding within three years, compared to an industry average of 19%. - This founder-friendly model operates within a thriving London tech ecosystem that ranks third globally, after San Francisco and New York, and has become Europe's leading hub for AI investment.
