EQT Ventures – the VC arm of private equity Swedish giant EQT partners – has a half a billion dollar war chest to fund companies. So far, it has invested in tech and SaaS firms including cybersecurity firm Baffin Bay Networks and CRM firm Beamery. Here, partner Ali Mitchell, explains what the company does and what it looks for in entrepreneurs.
What are the details of EQT Ventures, when was it founded and why? What is the goal of the company?
EQT Ventures announced its €566 million multi-stage fund at the end of the May 2016. The founding partners (Hjalmar Winbladh, Kees Koolen and Lars Jörnow) modelled the fund on the kind of VC they would have wanted on their own entrepreneurial journeys. They were all aware that building a global tech company is challenging and takes more than just capital. Building a success story – not just on a local, but worldwide scale – needs focus, stamina, advice and mentorship, so the fund’s aim is to provide our portfolio companies with the support, resources, skills and experience needed to create a global winner.
What should entrepreneurs critically consider when seeking investment from you?
There’s a key consideration for founders before they seek investment from any VC firm and that’s whether you can see yourself having a real partnership with the fund. Great VCs don’t just invest capital, they bring a wealth of experience and connections with them and you need to ensure there’s investor market fit. Does the fund have relevant experience in the market, business model and stage you’re compant is at? You want a VC that’s going to be a true partner, help you navigate the issues your company’s going to face and accelerate your business.
Further reading on VCs and VCTs
- VC interview: Dharmash Mistry, general partner at Lakestar
- VCT Interview: Andrew Wolfson, MD of Pembroke VCT
- VCT Interview: Sarah Barber, CEO of Jenson Funding Partners
What are the key metrics that you consider when a company seeks investment?
For EQT Ventures, the founding team is key. We’ll consider if the founders in front of us really have the ambition, boldness and grit to build a multibillion-dollar company.
“VCs want to grow global businesses, not regional ones”
I want to see that you understand the market from an international perspective and you’re thinking big. Is your company tackling a huge global issue? There also needs to be effortless product-market fit – you need to build something that the market wants now. If you get product-market fit wrong, the business will break eventually. We also look at the team around the founders and whether the companies have world class talent around them or the ability to attract it in the future. To be successful, you need to surround yourself with a great team.
A video explaining a recent EQT Ventures investment
What is the stand-out transaction of the firm in recent months and how did it apply its expertise to contribute to a successful deal?
One investment story that springs to mind and really showcases how EQT Ventures’ expertise has helped accelerate the company is Small Giant Games. Before Lars Jörnow, partner at EQT Ventures, founded the fund he spent six years at King and managed the team that produced and launched Candy Crush Saga. Needless to say, gaming and consumer startups are a passion! He met Timo Soininen, CEO of Small Giant Games in summer 2016, when he was showcasing an early version of its Empires & Puzzles game. Lars was intrigued by the team’s direction, kept in touch and eight months later – along with some fantastic soft launch metrics it was clear the Small Giant team was onto something. EQT Ventures led the Series A the same day Empires & Puzzles launched.
“Fast forward and just 10 months after launch, the company was reporting $33 million of revenue for Empires & Puzzles in 2017″
Timo has said that Lars’ extensive mobile gaming experience has had a significant role in scaling the game and EQT Ventures went on to lead the companies $41 million investment round in February. The exponential growth continues as Small Giant Games exceeded last revenue of $33 million in the first four months of this year alone.
What key advice would you give to entrepreneurs seeking investment from venture capital and may not be familiar with the process?
Venture capital investment is like a marriage – you need to pick your partner carefully and consider how well you’ll navigate the ups and downs of the entrepreneurial journey together. They’ll be a lot and the downs are tough! Start building the relationships with VCs early, get to know them and see whether you have a good fit and could work together well. As my colleague Ashley has said “fundraising starts long before you ‘actually start fundraising’.”
