In 1998, Mathias Schilling and Thomas Gieselmann left Germany for California, searching for venture capital.
“We came out to California to scratch an itch, a personal itch,” Gieselmann tells me more than 25 years later. “We wanted to learn about this venture capital thing, which apparently involved providing capital to young people who didn’t have assets or co-signers. You just give them money for some share of a company!”
Gieselmann deadpans this before breaking into chuckles, getting at one of my favorite things about venture capital—that stripped down to the most basic terms, VC is a wacky proposition. But is it any wackier than chasing an idea across the world? Schilling and Gieselmann at the time were in their 20s and had met working at AOL in Cologne, Germany. When the two Kumpel touched down and explored Sand Hill Road in the 1990s, they found it wasn’t what they had imagined—both aesthetically dour and increasingly crowded. So, they started to ask: Well, where else could we set up shop?
“We flew to Santa Barbara, and you kind of land, and it looks like the movie Casablanca,” said Schilling. “We thought, this is the place. It’s between LA and Silicon Valley, and we didn’t want to be the 1000th firm on Sand Hill Road. Not because that hasn’t worked for others or there’s anything wrong with it, but it was very intuitive about what might work for us.”
So, Schilling and Gieselmann started Headline (the firm was called e.ventures until 2021) in Santa Barbara. Their first office sat atop a Mexican restaurant where a Mariachi band played every afternoon, and their first investor was German conglomerate Bertelsmann. It’s an exceedingly appropriate beginning for a firm that’s strategy has been global from the start. Headline’s winners of the last two decades-plus include U.S.-based Appfolio, Europe-based Farfetch, and Brazil-based Pismo.
The firm is now doubling down on its global focus: Headline has raised $865 million to invest in growth-stage companies, Fortune can exclusively report. It represents an increased emphasis on growth for Headline moving forward. It’s a high-stakes move for Headline: One long-standing LP Fortune spoke with sees this fund as an inflection point for the firm, as it vies for the chance to write bigger checks for bigger names. The fund will be deployed in North America and internationally, including in Europe and Brazil, looking to leverage the footprints that Headline has been building in those marketplaces.
“I don’t know if it’s the only, but this has to be one of the few growth funds that has people literally on the ground, in the local zip code, living the local language and culture,” said Romero Rodrigues, Headline’s managing partner in Brazil, where the venture market is nascent but has already produced winners (like Headline-backed Pismo, which last year sold to Visa for $1 billion).
To lead this new fund, Headline hired Shalini Rao, most recently of TCV, and Rao’s been building a non-hierarchical, title-less team of investors with credentials from Bond, Sound Ventures, and Insight Partners. The first time I meet Rao, she’s clear with me—she’s keen on developing a concentrated portfolio, where every single decision matters.
“Because we’re a new fund, every incremental dollar means the world to us,” said Rao. “That’s coupled with the fact that we’re not going to push founders to take more, and then push them to grow, because we’re trying to optimize for something. It’s such a luxury to have. I can’t think of many other situations where you have this perfect size for a growth fund.”
Rao’s previous growth wins include Toast and Gusto—by all accounts, Schilling and Gieselmann pursued her extensively for this gig—but she also fits the Headline non-mold. The granddaughter of a fisherman and the daughter of a DJ-slash-aerobics instructor, Rao grew up in Newfoundland, Canada with no connection to finance whatsoever. VC found her, and it has stuck.
“This job in particular, which I’m completely obsessed with, is this unique combination of research,” said Rao. “You can be analytical as part of a team, or you can go deep by yourself. It’s also a massive sales role where you’re both trying to get to the right answer, and pitching yourself. It’s looking at long lists of companies, doing outbound by leveraging these internal tools that we have.”
Freeze frame: My visit to Headline’s office in San Francisco’s Presidio marked the first time a firm showed me the internal tool that it uses to source deals. And it’s a feat of data-gathering. Headline’s internal database, which is Gieselmann’s brain child that he first attempted to build in the early 2000s, is essentially a massive narrow-down machine. The database tracks and standardizes private company data from about eight million startups worldwide, filtering those millions down to 100,000 that fit their investment criteria. Today, Gieselmann talks about the technology as an “accelerant” and, by the way he talks about it, he’s seemingly still chasing something—like getting that 100,000 down to a few thousand.
It’s a notably tough time in venture, and Schilling is candid about it with me. We talk about how the industry is bifurcating into the haves and have-nots, and he believes that generational succession in venture right now has perhaps “never been this hard.” But for Headline to make its global thesis work, the data is nice, but it comes down to the people.
“We also try to understand the context of people and be in it,” said Schilling. “Not just be a helicopter in and out of these different countries, but really live in it, experience it, fail in it, trying to be as good of a long-term partner as we can be. And it takes time, right? The full fruition of this, though—and I think it will be hard—but we’re really building this for the long-term.”
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Nina Ajemian curated the deals section of today’s newsletter.
VENTURE DEALS
- ZeroAvia, a Kemble, England-based hydrogen-electric aircraft developer, raised $150 million in Series C funding. Airbus, Barclays Sustainable Impact Capital, and NEOM Investment Fund led the round and were joined by UK Infrastructure Bank and existing investors Breakthrough Energy Ventures, Horizons Ventures, Ecosystem Integrity Fund.
- F2G, a Manchester, England-based fungal infections treatment developer, raised $100 million in funding. AMR Action Fund and ICG led the round and were joined by existing investors Novo Holdings, Advent Life Sciences, Sofinnova Partners, and others.
- Neo Medical, a Lausanne, Switzerland-based spine surgery technology company, raised $68 million in funding. Gyrus Capital led the round and was joined by existing investors Vincent Lefauconnier, Jonas Larsson, and others.
- Nomic Bio, a Montreal, Canada-based protein profiling company, raised $42 million in Series B funding. An undisclosed U.S.-based life-sciences-focused investor led the round and was joined by Amplitude Ventures, AVANT BIO, Lux Capital, and others.
- Pairwise, a Durham, N.C.-based gene editing company for plant breeding, raised $40 million in Series C funding. Deerfield Management led the round and was joined by Corteva and existing investors Aliment Capital, Leaps by Bayer, and others.
- Intezer, a New York City-based AI-powered autonomous security operations provider, raised $33 million in Series C funding. Norwest Venture Partners led the round and was joined by existing investors Intel Capital, OpenView, Magma, and others.
- GreenLite, a New York City-based construction technology company, raised $28.5 million in Series A funding. Craft Ventures led the round and was joined by 53 Stations, Trust Ventures, and LiveOak Ventures.
- Orb, a San Francisco, Calif.-based billing platform, raised $25 million in Series B funding. Mayfield led the round and was joined by existing investors Menlo Ventures, Greylock Partners, South Park Commons, and others.
- Jus Mundi, a Paris, France-based AI legal intelligence platform, €20M (US $22M) in Series B funding. Acton Capital and True Global Ventures led the round and were joined by C4 Ventures and FJ Labs.
- Roots Automation, a New York City-based AI model for insurance developer, raised $22.2 million in Series B funding. Harbert Growth Partners led the round and was joined by MissionOG, Liberty Mutual Strategic Ventures, and Vestigo Ventures.
- BlackCloak, an Orland, Fla.-based cybersecurity company for executives, high-net worth individuals, and family offices, raised $17 million in Series B funding. Baird Capital led the round and was joined by Blue Heron Capital, existing investors TDF Ventures, TechOperators, and others.
- Cybord, a Wilmington, Del.-based AI component analytics solution for electronic manufacturing, raised $8.7 million in Series A funding. Capri Ventures led the round and was joined by Ocean Azul Partners and existing investors IL Ventures and NextLeap Ventures.
- Timefold, a Ghent, Belgium-based AI-powered planning optimization platform, raised €6 million ($6.7 million) in funding from Lakestar and existing investor Smartfin.
- Two Boxes, a Denver, Colo.-based returns process software, raised $5.3 million in funding. Peterson Ventures led the round and was joined by Assembly Ventures and existing investors Vinyl, Range Ventures, and Matchstick Ventures.
- CUDIS, a Los Angeles, Calif.-based wearable technology company, raised $5 million in funding. Draper Associates led the round and was joined by Skybridge, Penrose, SNZ, and others.
- Hgen, a Los Angeles, Calif.-based clean hydrogen developer, raised $5 million in seed funding. Seven Seven Six led the round and was joined by Founders Fund and Fontinalis Partners.
- Hydden, a New York City-based identity security platform, raised $4.4 million in seed funding. Access Venture Partners led the round and was joined by Lockstep, Service Provider Capital, and angel investors.
- Track3D, a San Francisco, Calif.-based AI platform for the construction industry, raised $4.3 million in seed funding. Endiya Partners led the round and was joined by Shadow Ventures, Monta Vista Capital, and others.
- ContextSDK, a New York City-based mobile app user experience personalization platform, raised $4 million in seed funding. Speedinvest led the round and was joined by First Momentum Ventures and Heracles Capital.
- Daily Crunch, a Nashville, Tenn.-based trail mix and nut snacks brand, raised $4 million in Series A funding. Launch Tennessee led the round and was joined by others.
PRIVATE EQUITY
- Advantive, backed by Insight Partners and others, acquired Comsense, a Toronto, Canada-based ERP software provider for architectural opening distributors. Financial terms were not disclosed.
- Agellus Capital recapitalized BlackPoint IT Services, a Seattle, Wash.-based managed IT and cybersecurity services provider. Financial terms were not disclosed.
- Altas, a PE firm, is investing in Sedgwick in a deal that values the claims management provider at $13.2 billion. Carlyle and Stone Point Capital remain as investors with Carlyle maintaining its control position. Altas has committed to invest $1 billion as part of the transaction.
EXITS
- MITAR Private Capital agreed to acquire Micromatic, a Berne, Ind.-based rotary vane actuators, waste tippers, and automation assembly systems developer, manufacturer and distributor, from Forest Hill Partners. Financial terms were not disclosed.
- Luminate Capital Partners acquired AbsenceSoft, a Golden, Colo.-based SaaS leave of absence and accommodations management platform, from Norwest Venture Partners and Bow River Capital.
- Olympus Partners has sold Rise Baking Company to private equity firms Platinum Equity and Butterfly Equity. Financial terms weren’t announced. In 2018, Olympus acquired Rise Baking, a North American bakery manufacturer that produces products such as cookies, cakes, pies, muffins, and icings for in-store bakeries and foodservice customers. With the sale, Olympus is making 2.58 times its $374 million investment for a 20% I.R.R., one person familiar with the situation said.
OTHER
- SS&C Technologies Holdings agreed to acquire Battea-Class Action Services, a Stamford, Conn.-based securities class action claims management and settlement recovery services provider, for approximately $670 million.
- Typeface acquired Treat, a hybrid, U.S.-based generative-AI brand imagery platform. Financial terms were not disclosed.
- Typeface acquired Narrato, a hybrid, U.S.-based AI content company. Financial terms were not disclosed.
IPOS
- Moove Lubricants Holdings, a São Paulo, Brazil-based automotive, agricultural, and industrial lubricant producer and distributor, filed to go public on the NYSE. Cosan and CVC Capital Partners back the company.
FUNDS + FUNDS OF FUNDS
- Alpha Partners, a New York City-based growth equity firm, raised $153 million for its third fund focused on primary financing rounds.
PEOPLE
- AE Industrial Partners, a Boca Raton, Fla.-based private equity firm, added Ryan McCarthy as an operating partner. Previously, he was the U.S. Army secretary.
- Felicis, a Menlo Park, Calif.-based venture capital firm, promoted Jake Storm to general partner and Tobi Coker to partner.
- Flexpoint Ford, a Chicago, Ill.-based private equity firm, added Emily Henry as managing director. Previously, she was at BayPine.