Cottonwood Technology Funds, a top performing investor in technology start-ups in the US, will be establishing its first European presence in the Twente region in The Netherlands. Cottonwood now has over €10 million available for investments in pioneering companies in the Netherlands and the US. The fund primarily invests in companies active in photonics, advanced materials, healthcare and clean energy. The arrival of Cottonwood, one of the most successful seed/early stage funds in the US, shows the Netherlands to have significant advantages for investors. Representatives from Cottonwood have stated that the “Twente ecosystem” was an important factor in their decision to base in the east of the Netherlands.
Cottonwood is one of the only funds in the US to excel in seed/early stage investing outside The Valley and Boston. They focus on regions rich in ideas, but emerging in the areas of experienced management and capital. “We chose Twente as the epicenter of our European hub because of the existence of its world class entrepreneurial environment, the leading entrepreneurial university there, and their joint commitment to continuing to develop this ecosystem. We believe our approach can catalyze growth in the region’s start-up economy and provide a missing piece of the puzzle for this environment,” says Netherland’s lead General Partner Ray Quintana.
The founding Twente partners for the first closing include the University of Twente, PPM Oost, Twente Region and Thales. It is Cottonwood’s expectation to expand these initial funds of €10 million to €30 million through the addition of more regional and multinational partners during the remainder of the year. Just like Thales, these new partners will benefit from the access Cottonwood provides to emerging technologies in both the US and Europe.
Strategy
Preqin, a recognized leader in tracking private equity fund performance, lists Cottonwood as the best performing early stage VC fund in the US for its vintage year. The investment strategy that Cottonwood follows from day one, is to focus on international growth and increasing the value of the entire company. Other investment fund companies often focus on the value of their own share and on the initial funding tranche. Cottonwood’s approach is to identify compelling technology, and then recruit all other resources needed for success to partner with the company, while allowing the company to grow and prosper in its region of origin. This has led to a valuation increase on its US fund approaching 300% after only 3 years. Quintana: "We try to get a good deal, with a great company, instead of the great first round in a good company. Cottonwood Technology Fund will make 2 - 3 investments in new companies per year over their initial four year investment period."
According to the Dutch founding partners the University of Twente, PPM Oost, Twente Region and Thales the start of Cottonwood in Twente accelerates Twentes ambition to become Europe’s leading high-tech region in High Tech Systems and Materials.
