Since 6 months back, I am based in Palo Alto to establish Creandum’s Silicon Valley office. Apart from the sunny weather and great surfing, there are a number of reasons why we are here.
We believe that one of the most important services we can do for the entrepreneurs the Creandum funds invest in is to help them establish themselves globally and in particular in the Unites States. Silicon Valley is the world’s technology capital and although the world is getting flatter – more startups popping up with great entrepreneurs in all corners of the world – I believe Silicon Valley’s gravity is stronger than ever. The capital is here, and our smart phones are on platforms controlled by Apple and Google and other parts of the internet and distribution is controlled by Facebook, Saleforce.com and alike. The exit market is here – 85% of all tech M&A deals are made by US companies and the IPO market is to a large extent in the US. With its vibrant ecosystem Silicon Valley has a very strong competitive advantage – from a European perspective it is almost “unfair”.
About half of Creandum’s investments seek US funding in their B or C rounds, and/or establish their headquarters or a large presence in the US. We spend our time helping Creandum’s portfolio companies with anything from recruiting to partnerships. We network with VC’s and angel community to syndicate investments in current or future financing rounds. We meet the established tech companies to understand their strategic focus and acquisition strategy. Our presence enable us to benchmark deals Creandum looks at in Europe and ask ourselves “is this the right team, is it the right goto market strategy etc” to invest in, and we can catch European entrepreneurs that come to the US bypassing the European VC’s. We believe this is true value add to Creandum’s companies and we have already had a number of great outcomes thanks to our presence here.
The primary purpose is not to make new investments in US companies, but we are always on the look out for the best entrepreneurs globally. In order to retain the best deal access we believe it is vital to remain focussed on the European market. Creandum believes that the Nordics, in spite of being a small market, is one of the best places on the planet to start a new business and Creandum will continue to invest in companies coming out of the region and Europe. However, increasingly we see teams outside the Nordics but with Nordic DNA in the founder team, or for some reason or other, that have grown out of the Nordic market. Creandum’s investment in the San Francisco based company Omniata is such a case. A great team with a world-class analytics software, still in closed beta, but with all the major F2P game companies (out of the Nordics) as customers, created a great investment opportunity for Creandum.
The Nordics has produced a disproportionate number of billion dollar companies including Spotify, Skype, Qliktech, Supercell, Rovio, and MySQL – and our team have been fortunate to be involved in some of these. Companies coming from small home markets have to think globally from day one, and the Nordics has one of the highest internet and smartphone penetrations making it an ideal place to deve product proof of concept. Another common trait of the Nordic entrepreneurs is pragmatism, transparency and sense for UI and design. And in the Nordics cost for tech talent is at least 50% lower than in Silicon Valley.
Spotify, Wrapp, Hansoft, Vint and Vivino are a few of the companies that Creandum have invested in, who all have a presence in Silicon Valley and many of Creandum’s 40 other portfolio companies may decide to open offices in Silicon Valley in the future. When this becomes relevant for them, Creandum will be on the ground to assist them.