Staffan Helgesson, founder of Creandum – one of Europe’s leading venture capital investors – believes there are more promising investment prospects now than ever before. Creandum is deploying an even more diversified team to hunt for the next unicorn, also outside the conventional boundaries of the technology sector.
Founded in Sweden in 2003, Creandum is one of the best-performing venture capital investors in Europe. Last year the company was particularly successful, making five graceful exits, including Spotify, Elastic Search, Small Giant Games and Cornershop.
“As far as exits are concerned, it’s difficult to match such a successful year as 2018. With exits, the economic cycle must always be factored in, whereas you can invest in new companies whenever. Creandum invests in companies over a 10-year cycle, so business cycles can change within that span,” explains Creandum’s founder Staffan Helgesson.
Disruptors envisaged in B-to-B
Helgesson foresees a bright future despite the pessimism of prevailing economic forecasts.
“There are more opportunities than ever right now. My estimate is that some 90% of global GDP is still generated in sectors not yet really disrupted by technological advances. I believe many of the next success stories will be in conventional sectors that are seldom thought to be adaptable with technology” Helgesson says.
This trend is visible in Creandum’s recent investments, which include Cargo.one, a company digitalising conventional air freight, and Xeneta, which offers price comparisons and market data in maritime freight.
“The transport and logistics markets are a prime example of sectors in which companies are large and have a lot of clout. However, apart from delivery services, the sector has not yet much exploited the opportunities that technology offers,” assets Helgesson.
Sufficient potential in Europe
In Helgesson’s opinion, the next success story could be found in any corner of the world.
“China will overtake the USA as a technological power house, which will certainly upset the present scenario. Although Europe is often overshadowed by those two countries, there’s good potential here also for disruptive global businesses,” says Helgesson, and adds:
“Europe does not lack talent, but perhaps we need a more resolute attitude towards business and risk-taking. A good example of this is Finland, where Nokia’s difficulties in the end opened up a good field for startups.”
Helgesson points out that, for the startups, difficult times are often a gold mine.
“Many successful companies were often established during an economic downturn. VC investors make it possible for companies to grow and expand internationally in challenging market conditions. Also state-owned players like Tesi play an important role as a catalyst in raising the amount of financing needed.”
Competition stimulates the venture capital market
Helgesson hopes for more competition in the Nordic venture capital market. He believes the successful ascent of new teams will give impetus to existing ones.
“A good VC player must have a clear strategy for identifying investee companies with large enough markets and with ideas for disrupting them,” advises Helgesson and adds:
“The backgrounds of a good VC team can be varied, but what should unite the team members is the ability to live in uncertainty and willingness to take risk. Networking is also extremely important, as well as the skills needed for building good relationships.”
Responsibility is good business
Creandum aims to increase the diversity of its own team, and has examined how equality is achieved in practice, both in its own operations and in its portfolio companies. The company has trained personnel to recognise biases and puts a spotlight on equality at industry events.
“We approach diversity from two directions. We want to promote gender equality and increase the number of employees with first or second generation immigrant backgrounds, both in-house and in portfolio companies. While it’s difficult for women to break through the glass ceiling, it’s just as challenging for certain immigrant groups whose representatives experience discrimination – perhaps just because of their names.”
Helgesson points out that research data provides evidence that diverse teams perform better.
“We still have a lot to do in our own team too. Of our 18 staff members, ten are men and eight are women, but there’s only one woman in our investment team. That’s an important start, though, because investor teams are predominantly male. To fundamentally change this high-profile female role models are needed and we have an important role in helping them succeed,” says Helgesson.
Creandum also evaluates the environmental perspectives of each investment, as well as its diversity aspects. Many of the company’s latest investments have promoted climate change mitigation.
“Responsibility has been transformed from a buzzword into practical deeds. At Creandum, we give high priority to environmental issues and diversity because they are good for business and they improve returns,” sums up Helgesson.
Creandum Advisor AB
What it is: Venture capital advisor company with funds investing in innovative companies seeking international growth through technology.
Where it is: Stockholm, San Francisco and Berlin. Team of 18 people.
Funds: Latest fund (Creandum IV) 2016. Raised altogether approximately MEUR 500 and financed 75 companies including, for instance, Klarna and Virta. Tesi has invested in the Creandum II, III and IV funds.
The article was first published in Tesi’s Annual Report 2018 here.