Last week came the news that 500 Startups had filed for a $15 million fund to invest in Nordic startups. While it was not a major surprise following the recent setting up of a pre-accelerator in Oslo, a planned accelerator in Stockholm in May 2016 and Partner Sean Percival's increased presence in the region, it is still of course major news for the Nordic ecosystem.
The fund will look to make 100+ investments in Nordic startups over the next couple of years with their main areas of focus being SaaS, Mobile, Marketplaces, E-commerce, Fintech and Music/Video.
However, the 500 Startups press release announcing the fund, not only carried details of their future investment intentions, it also contained details of which Nordic companies they'd already backed.
In an effort to delve deeper into what 500 Nordics will be looking to invest in going forward, I caught up with Sean Percival to get his reasonings behind each of their Nordic investments so far to give the rest of us a better understanding and insight into their thought process when it comes to backing Nordic startups. After a rather ridiculous photo of Sean dressed up as a viking of course.....
(Disclosure: 500 Startups are a partner of The Nordic Web)
"This is one of the few founder led bets i've done in the Nordics. The founder (Editor: Inge Andre Sandvik) has worked at Opera, worked at Compaq, worked at several big companies, and then founded Sounddrop, which was done fairly well, and was somewhat high-profile a couple of years ago. The reason why I say founder-led is because they are pre-launch so he is still figuring it out, he was able to prove though, that the product was built, and that he had strategic connections with Spotify and other key players in the music industry, so he had an unfair advantage there"
"They have their product out already and I like startups that are disrupting or out pacing big slow dinosaurs, and in this case who are building better solutions, products and algorithm than the cable companies are and they already have several partnerships with the major telcos' and cable companies in the region and they have a clear path to revenue both in the value of the data they sell and in selling tickets to the movie theatres too."
"They have good monthly revenue, thats a big signal for us, they have reoccurring monthly revenue which is even better. They also have big market customers in Conde Nast and New York Fashion Week, which is enough validation to show me that they're ready to move on to the next stage."
"They've got a strong team, they're massive experts in what they do, they inherited all of the tech from the hardware pacemaker device, which received about $15m in funding and they bought all of the technology and the IP for practically nothing when that didn't work out, and moved it all on to an app. They're generating pretty significant revenue, 100,000 of users within the app, it's mobile and music, so things that maybe people get a little bit scared of, but the monthly actives are high and the revenue is looking good, so it's looking like this is going to have the opportunity to scale pretty well."
"A few reasons here, firstly it's easy to make a founder bet on Hampus Jakobssen, the solution is well built, which is a huge signal to me, several of our larger companies are using them, they have good monthly revenue and good clients. Intercom.io is one of them, one of our most successful accelerator companies, so if my companies and other big companies have signed up, that's the validation I need."
"They came into the accelerator about a batch and a half ago, it's a sales tool/SaaS platform, we've had good history and experience with these sort of tools. They had something unique on the marketplace, a little bit of revenue, they came onto the programme, made more revenue, changed the product, now launching a new product and we love sales tools and platforms, they scale really well."
"I'm very impressed with the founder, a lot of the time I just go to other accelerators and say who are your best companies, and this was one of them (Startupbootcamp, Copenhagen). Ive seen a lot of people try and solve this problem the hard way, making you measure yourself, but they've found the easier way by using big data. I felt I'd seen people try and fail but they are succeeding and they do have revenue and they are booking clients. And I felt we could help them, we have a lot of ecommerce sites so its easy for me to make introductions to our companies for them to use the product."
"They were in the last accelerator, we want to do more in digital health, solutions that empower people to get healthier. We were impressed with their total downloads and monthly active users. Many companies come to us and they have a hundred monthly users, but we need to see many thousands, tens of thousands active users and they were at that threshold."
Due to 500 Startups' diverse investment strategy it is hard to draw a correlation between their investments, nevertheless, I have tried to form a few conclusions from their existing investments and Sean's reasonings:
(Please note, these are my own personal conclusions, and don't necessarily reflect 500's view)
- Sales platforms/developer tools, really easy to scale platforms, people disrupting the big industries and digital health seem to be of particular interest to 500.
- Revenue is required, preferably monthly recurring, unless you have an exceptionally strong team in place with a strong previous track-record.
- If you can boast some big name clients, this will definitely help validate you.
- The more monthly active users you have the better, preferably thousands, if not tens of thousands.
With the pre-accelerator in Oslo, the accelerator in Stockholm to come, and now the $15 million fund, hopefully we'll have plenty more of Nordic investments from 500 Startups in the near future to analyse too.
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