Leading EU Early Stage Venture Fund Speedinvest raises 58M EUR for Second Fund, Proposes New Model for Early Stage Investing
Speedinvest has just announced the launch of its second fund with 58M EUR this week., the largest ever raised in Austria. The European tech ecosystem has traditionally been undercapitalized, but recently there is increasing overall interest in tech startups. A competitive, global environment is developing where money is chasing premium returns outside hotspots like Silicon Valley. Oliver Holle, Speedinvest founder and managing partner, explains Speedinvest’s new model: ‘Europe has a few great fundamentals for venture investment, but in order to make seed stage VC work in our region, we really had to re-invent the model.’
Speedinvest brings significant innovation to venture capital, in terms of LP structure and incentive model for GPs. Specifically, the Speedinvest model offers a unique growth platform for its portfolio companies by engaging members of the fund in full-time operational roles such as marketing, business and corporate development, thereby significantly extending the value chain typically covered by venture investors. This model not only raises the success rate of Speedinvest’s seed investments, but also contributes significantly to the equity pool for its investors.
This “work for equity” model is also the basis for Speedinvest’s incentive model for its general partners, as Holle explains, ‘We charge very low management fees and we don’t charge carried interest. In exchange for our extensive, hands-on work, the general partners take an equity stake in the fund. It’s an incentive model that nicely aligns general partners, investors and founders. We succeed when everyone succeeds. Rather than live on management fees and hope for the next unicorn, we create a lot of value out of consistent, strong base hits. Of course, we don’t exclude the unicorns, but our model significantly raises the floor on traditional VC and that is essential for Europe.’ Erik Bovee, Speedinvest founder and US managing partner underlines the importance of this entrepreneurial approach to VC, ‘All of the Speedinvest founders are serial entrepreneurs. We have been through the cycle a few times, and we take very active roles with our portfolio companies, much more than just board seats and networking. We help them address specific challenges. One key goal is to build business in the US. With our offices and partners in both Europe and Silicon Valley we are designed to do just that. So far, the formula works very well.’
Speedinvest’s investors align well with this approach. Speedinvest is supported by 80 entrepreneurs and private investors who actively co-invest and in some cases collaborate with Speedinvest’s portfolio. Apart from AWS, an Austrian government agency that invested 7M EUR, Speedinvest´s funds are 100% private – in stark contrast to the typical Central European fund where often more than 50% comes from taxpayers. Speedinvest enjoyed 3 highly profitable exits in 2014 and has plenty of proof points for its model from its 1st fund: startups like Wikidocs, acquired by Atlassian in 2014, or indoo.rs, an indoor navigation startup that just launched its innovative solution for San Francisco International Airport and is partnering with Marvell in Silicon Valley. Speedinvest counts another half dozen European success stories including Shpock, Wikifolio, Holvi, Hitbox and Crate.io that attest to the success of their ‘hands on’ investing model.
The Future of Speedinvest: Pan European Focus, Pioneers partnership
Speedinvest is expanding its traditional Central European focus and will source deals from across Europe. For this purpose, Speedinvest has built a strategic partnership with Pioneers (http://pioneers.io), the organization behind the Pioneer’s Festival, one of the world’s premier technology events, as well as more than 60 smaller startup events across the globe. Pioneers holds an annual startup competition with over 800 applicants and provides a platform of events and media support for startups. Pioneers provides Speedinvest with a source of dealflow, and a platform for exposure that are unrivalled in Europe. Speedinvest 2 will also provide later-stage, growth capital, in addition to writing pre-seed tickets for the best, nascent companies.
Speedinvest has also bolstered its core team with new partners from the upper reaches of the European startup and corporate technology world. Michael Breidenbrücker, founder of Last.fm (acquired by CBS $240 million), Marie-Helene Ametsreiter, telecom executive and ex-CEO of Croatia’s leading mobile carrier VIP.net, and Stefan Klestil, angel investor and financial technology expert, have all joined the Speedinvest team as general partners. Last, but not least, Johann ‘Hansi’ Hansmann, one of the most prolific and successful regional angel investors, has joined Speedinvest as chairman of the board.
‘Speedinvest has really gone from strength to strength,’ concluded Holle. ‘We had originally targeted 25 million Euros for our first close in February of this year, but have raised nearly 60 million to-date. Our second, and final close will take place in autumn of 2015, and I won’t be surprised if we end up nearly doubling our original fund size of 50 million. Speedinvest is strongly positioned to make Vienna a center of gravity not only for Central Europe, but for the entire EU tech ecosystem.’