Forestay, Europe’s newest $220M growth-stage VC fund, will focus on AI

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Forestay, an emerging VC based in Geneva, Switzerland, has been busy. This week it closed its second fund, Forestay Capital II, at a hard cap of $220 million. The VC wasn’t well known in Europe until it started leading rounds in enterprise startups a few years ago, most notably scanning software startup Scandit — which has raised $273 million so far from Zurich.

It added that the Forestay II fund will invest in Europe and Israel, with a “sweet spot” of $10M-$15M in lead growth rounds based on a company’s inflection point.

To date the VC has backed 13 companies including K2View, Nexthink, Scandit and Wasabi, three of which reached unicorn status and two were acquired. Most recently, the firm backed Neural Concepts, a company spun out of EPFL, the Swiss Federal Institute of Technology in Lausanne, which raised $27 million in a Series B round to tackle agile manufacturing design with AI.

Foreste also led the A round for Portugal-based ‘predictive maintenance’ startup Stratio in 2021, raising a $12 million Series A.

The Foreste Fund was established as a fund of B-Flexion, a private investment vehicle created by the Bertarelli family, best known for building Serono into the third-largest biotech business globally prior to its merger with Merck KGaA.

Forestay is led by Friedrich Wohlwend, former global chief digital officer of Merck KGaA and Serono.

“As a chief digital officer at large companies, particularly in the biopharma clinical space, I had the opportunity to see the entire value chain, from early research to distribution,” he told TechCrunch on the call. “So we decided to focus on the enterprise and enterprise AI after knowing the enterprise inside out.”

Wohlwend said that “it’s a highly competitive market,” but the fund will be “highly focused on our way of doing enterprise,” adding: “We only do enterprise AI and SaaS. We don’t do any hardware, even sensors and things like that. We’re very focused in terms of stage — we play primarily in Series B. We can do A to C rounds, but our sweet spot is Series B at the inflection point. So we brand ourselves as a ‘near-growth’ fund because we go after our targets as soon as they’re making some kind of revenue.”

He added that, as we reported recently, in addition to Switzerland being “an interesting ecosystem,” southern Europe is also emerging.

Foreste’s new fund is also backed by Anais Ventures, the investment vehicle for some members of the Firmenich family, which built a perfume empire.

In a statement, Julian Firmenich said: “Foreste’s focused investment strategy and operational skills, developed over years of industry experience, align perfectly with our vision.”

Because consumer markets are so fragmented geographically and linguistically, Europe has created a very strong market for SaaS and enterprise, and there are plenty of enterprise-focused VCs there.

Indeed, an in-depth analysis of the top companies and trends in the SaaS market in Europe and Israel last year revealed that the SaaS ecosystem market reset was driven by the rise in generative AI. But ForeStay’s emergence can only be a good thing, as it increases funding options for growth-stage startups in Europe, where obtaining growth capital is often harder than in the US.

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