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Enovoas and Creos Embrace Corporate Venturing

Enovos and Creos embrace corporate venturing

Capital V #9 | Interview with Nicolas Milerioux


Interview with Nicolas Milerioux, Investment Manager of the newly created limb of Encevo Group.



The group, composed of energy provider Enovos and grid operator Creos, is a regional energy leader and key player in Luxembourg’s energy transition. After other innovation‑driven initiatives such as enosmart or enosolar, the group now adds corporate venturing as a supplementary layer to accelerate the deployment of innovative solutions through hand-picked equity investments into European ventures during the expansion stage, usually referred to as the Series A funding round.

What type of companies are you looking for and what can Enovos offer to its funded companies?

We look for companies with scalable solutions, a clear innovation edge, first customers and working installations leveraging on key topics such as decarbonisation, digitalisation and decentralisation.

We are not aiming at becoming their main customer but see ourselves more as an active, strategic partner that will make an impact by providing, beyond funding, access to our brands, sales channels as well as in-house expertise.
Which are Enovos’ goals with this initiative?

This initiative is meant to assist the Encevo Group to keep track of evolution of market dynamics and technology trends and developments. New innovative products and solutions, if relevant to our structure and strategy, will enable us to participate in new market segments or business areas. Aside from the investment aspect, we will also scout and identify potential partners for specific projects or developments.
How many investments are you planning per year?

We plan two to three investments per annum, which is probably lower than traditional funds, but our idea is not to build up a large portfolio but rather to focus on getting the most of our investee companies.
How many companies do you have under your radar?

Nearly 200 companies have gone through our reviews and we are currently looking into more details of a limited number of them. I am quite happy with the pace we are ramping-up at, given that we did not make any marketing expenditure.
Do you expect to find good investment opportunities within Luxembourg? Are you doing anything specific to foster targets in Luxembourg?

We have seen interesting projects in Luxembourg that we follow closely. Our local and international ecosystem is gaining in maturity every year and we would be thrilled to foster our local entrepreneurs. We support local activities and initiatives for start-ups, e.g. by participating in Technoport and Nyuko, as well as related activities, like being jurors in pitches. We could rely on our excellent relationships with the local ecosystem if we were planning to organise a call for start-ups later on.

On the other hand, our investee companies from abroad will be able to rely on our network to operate in Luxembourg.

Do you expect the funded companies to be absorbed by Enovos at some point or you have a more open market approach? (co-investment with other investors)

Our size and regional footprint may not be sufficient to entertain an exponential growth that success stories require. As a consequence, spin-ins will be the exception.

Co-investment is our preferred route. We have already built a number of relevant connections, as our value proposition is complementary to both generalist and cleantech/energy funds.
Given that the Luxembourg Future Fund also targets cleantech, will there be room at some point to raise funds from LFF?

We are currently outside some key criteria of the LFF, which are aimed at investing in clearly segregated teams and structures.

However, we are currently evaluating several options for the medium term. Once the roadmap has been be cleared, we will certainly revert to the SNCI and EIF to see if the LFF or other programmes could be relevant.
Did you set a time frame for a first assessment of the impact of this initiative?

We have continuously measured the progress and impact of this initiative since day 1 but most foreseeable outcomes will take 12-24 months from the initial investments.




New innovative products and solutions, if relevant to our structure and strategy, will enable us to participate in new market segments or business areas.


EQT Ventures out from Luxembourg

EQT Ventures out from Luxembourg

Capital V #9



On 25 May 2016, the EQT Ventures fund (“EQT Ventures”) held its final close and secured commitments totaling EUR 566 million to support fast-growing, innovative and tech-enabled companies, and support great entrepreneurs throughout all different stages of growth. The fund’s core region is the European area, but it considers and evaluates investments anywhere in the world. In addition to a strong interest from global institutional investors, EQT Ventures was also backed by a network of prominent entrepreneurs.

EQT Ventures has a multi-stage strategy. The investments range from an early stage A round of EUR 1 million to growth investments of up to EUR 75 million. This means that EQT Ventures’ support window is wider than a typical single-phase fund. EQT Ventures also evaluates minority equity or equity-related investments along between founders and other venture capital firms in technology-enabled businesses across all sectors.

Considering that EQT already had an AIFM licence in the Grand-Duchy, and the attractive conditions for setting up private equity funds in the area, it was decided to launch EQT Ventures and all related vehicles in Luxembourg, being a one-stop shop solution with superior substance that is simpler, cost-efficient and less risky. In order to facilitate a smooth set-up process, EQT sought direct contact from the regulator and other authorities for an open and progressive dialogue.

The EQT Ventures investment advisory team combines some of Europe’s most experienced and successful serial entrepreneurs and company builders, engineers, designers, marketers, data scientists and scaling experts. The team use their experience from success stories including Booking.com, Uber, King and Spotify, to support ambitious founders on their journey to global success.

Europe in particular is currently facing a huge demand for venture capital, as transformational shifts in technology are occurring across numerous industries, and this disruption is spurring on new, innovative companies. EQT Ventures is very well positioned to support entrepreneurs in this fast-paced environment, combining the team’s own entrepreneurial skills with EQT’s proven track record of developing companies and its established network of over 250 independent Industrial Advisors, which features a variety of global business leaders and successful entrepreneurs.

The aim is to provide the resources, skills and experience to help partnering companies deliver sustainable, profitable growth.

While EQT Ventures’ focus is not seed investments, a matchmaking platform and app, called Together, has also been launched for angels and early-stage startups, aimed at making the earlier stage of raising funding for founders of startups easier. Additionally, EQT Ventures has created its own AI-driven initiative called Motherbrain, which builds data sets from available information on companies in relevant regions and stages, analyses growth signals and ranks the most interesting companies to proactively source potential investment opportunities.


It was decided to launch EQT Ventures and all related vehicles in Luxembourg, being a one-stop shop solution with superior substance that is simpler, cost-efficient and less risky.



Jens Hoellermann

Senior Manager, EQT Fund Management S.à.r.l.


Meet the investor: Michael Jackson, Mangrove Capital Partners

Meet the investor: Michael Jackson, Mangrove Capital Partners

Interview as featured in Startups (http://startups.co.uk/) – 25/10/2016



Michael Jackson
Partner, Mangrove Capital Partners

Partner of the European VC firm behind Skype and Wix, Jackson offers up a number of useful insider tips to help you secure funding…



Where are you based?

Mangrove’s office is in Luxembourg and I am fortunate to live just a few hundred metres from the office. As a team we spend most of our time outside of the office either meeting with our portfolio companies or searching for other transformational businesses across Europe and beyond – but we have a full team meeting for two days once a fortnight, with no excuses for not attending.

I’m the only British partner in the firm so London naturally falls under my remit and I visit the city every other week or so, except in the summer months when you’re more likely to find me working from my place in Cannes.

What kind of investor are you?

We take the view that the venture capital firm (VC) should be a company’s biggest cheerleader.

We ensure our founders have the support, encouragement and experience they need to build disruptive, global companies. We empower them and encourage them to think big, take risks and go for “hyper growth”.

We invest in companies because we believe in the individuals behind them and our founders know that we will support them through good times and through bad.

I’m pretty sure that you can pick up the phone to the founders of any company that Mangrove has invested in and they will give a positive recommendation – even if the company didn’t work out.

Our own behaviour in bad times is every bit as important as in good. Perhaps more so.

What kind of deals do you finance?

We take big risks at the earliest stages of innovation, with the aim of being the first institutional investor.

The firm has co-created projects and regularly injects funds prior to product launch but we’ll follow on with successive rounds of financing for the companies showing promise.

Our early success with Skype – which was sold to eBay for $4.1bn in 2005 – created a culture of risk-taking within Mangrove. It also gave us the confidence we need to convince entrepreneurs that they can conquer the world.

Rather than following the herd, we typically take a contrarian approach to investing and like to back unusual, unproven or unfavoured technologies. We’ve so far avoided fintech for example – partly because fintech valuations are high but also because we remain unconvinced by many of the business models.

That said, we do believe there will be some great fintech businesses to come and we haven’t given up looking for them.

What kind of person do you invest in?

We like to invest in passionate founders that can articulate their business in a simple and comprehensible way. We also like companies with an unbridled focus on product with a commitment to bringing one customer experience to market.

And finally, we like to invest in entrepreneurs that display humility because innovating is hard, lonely and fraught with traps. We like founders that understand this and look for advice from a variety of sources.

How do you source prospects?

Skype was one of Mangrove’s first investments so we’ve never had much of a problem sourcing prospects.

We receive a large number of incoming opportunities directly from founders but we also like to find opportunities through our network. Our team has a presence across Europe and our portfolio includes some of the most respected founders in key hubs such as Berlin and Tel Aviv.

We look at around 2,000 companies each year and invest in perhaps six of them.

What is your ideal investment?

Our ideal is a seed investment in a weird but compelling idea with an impressive team. We typically invest up to $1m in the first stage for 20-30% of the company.

What are your USPs?

Unlike any other early-stage VCs, we have played pivotal roles in the success of billion dollar technology companies – that’s companies that have actually exited with over a billion dollar returns to investors in real cash, not internet money.

We are no longer looking to prove ourselves, instead we want our companies to be successful. Skype is our best-known success story but we were also early investors in Wix.com, the largest tech IPO to come out of Tel Aviv.

We bring this experience to each of our portfolio companies and can save them considerable time and resource. We also have huge follow on firepower so for our portfolio companies that perform well, future fundraising will be much less of a distraction.

We’re also experienced operators rather than finance guys. I trained as an engineer and launched the first MVNOs in Europe before joining the founding team at Skype and taking on responsibility for turning an innovative idea into a well managed global business. Skype was a long time ago now but it remains the playbook for success and I was fortunate to have benefited from some very unique experiences, such us changing the regulatory framework for telecoms in Europe.

Importantly, we also have an entrepreneur-centric approach and are proud of the relationships we build with our founders. Many founders would rather stay clear of their investors, yet Wix.com asked our CEO Mark Tluszcz to be chairman after it listed on Nasdaq. In the VC world, that kind of thing doesn’t happen very often.

What are the hot sectors?

We’re focused on solving some of the major societal problems and finding opportunity in macro trends.

For example, we see the high levels of unemployment across Europe as a serious issue and backed Job Today. We also think that new technology is needed to address the ageing population.

We generally avoid the ‘hot’ sectors although we recently invested in a fascinating AI business in London. Echobox is helping publishers compete with digital disruptors by increasing traffic from social platforms – the new lifeblood of media distribution. Apester is another company helping publishers which we backed.

From a personal perspective I’m fascinating by bitcoin, partly because of my work with decentralised networks at Skype. I haven’t made any investments yet in this space but I’m very active in the bitcoin community and am on the board of blockchain.info.

Three things a company should be able to offer an investor?

Money doesn’t come from nowhere. We invest money that is entrusted to us by pension funds and so on, money that belongs to ordinary people. We have a responsibility to find companies that will be successful, but also a deal structure that makes sense for everyone.
The journey will be long, so we need to work with companies and products that we can stand behind. In many many cases, we do not invest because we do not feel comfortable with the founders. This is very personal, and extremely difficult to predict.
Finally, we like the company and the founders to able to express their product clearly and simply. They will be telling a story every single day. It needs to be a story that customers, partners, employees, family and investors can understand.
What is the cardinal sin when looking for investment?

Lying and hiding things. Not telling the truth about deal status, deal interest, offers from others and so on. For us, this is a deal breaker.

What continuing involvement do you like in an investment?

The company is run by the founders, never the investors. If I wanted to run a business, I would start one. We are not short of ideas!

I like to be a trusted partner of the founding team, somewhere they can go for impartial advice – even as personal matters affect their day to day work. This is key. As we said before, it’s tough at the top.

What has been your best performing investment to date?

Skype was the best performer – we turned $1m into $200m. However we made far more from Wix.com.

Mangrove’s portfolio includes success stories such as Skype, Wix, Nimbuzz and the latest trend setters Job Today and Outfittery.


Venture Capital in Luxembourg

Venture Capital in Luxembourg

Capital V #8


Luxembourg is for long known as a place for finance in the international scene. Recognised as a leader in the banking and investment funds industry, it has also in the past decade established itself as a private equity and venture capital centre with winning features that have convinced the top 10 private equity players to set up cross-border operations in the country.

In the field of entrepreneurship the scene is somewhat different. As in many other European countries, entrepreneurship took some time to develop its own supporting structures and, also highly significant, its “hype” for start-ups.

Fortunately, today entrepreneurship is on the agenda and much has been happening. Incubators, co-working spaces, pitching competitions, coaching programmes, all of these and much more is available, one just need to knock on the right doors and follow the right media. Luxembourg is even about to be a pioneer in the registration of companies with the creation (from January 2017) of the 1-1-1 company which introduces the €1 starting capital simplified limited responsibility company (S.à r.l S).


Given the surge of an “entrepreneurial” culture in Luxembourg and the dynamic of the financial centre, the obvious question arises: is the world of finance reaching local entrepreneurs?

We try to answer that question by featuring which resources are available today for entrepreneurs.

Public funding

Most entrepreneurs start by looking for public funding, and Fit4Start is there to support them in the first 4 months. A subsidy of €50,000 is available for those looking to accelerate their venture and gain the skills required to seek further funding from the private sector. A few conditions need to be met and the public funding can then be topped-up by €100,000 if the company succeeds in attracting further private investors.

Business angels

Further private investors may well be business angels, individuals with funds to invest and expertise in technical and/or management fields who may join young ventures at a very early stage. These individuals are attracted by high growth potential and scalable start-ups and can be reached via LBAN, the Luxembourg Business Angel Network, a non-profit association. To date, LBAN has nearly 50 Luxembourg-based members and organises networking events once a month (Angel Café) which often include an opportunity for start-ups’ to pitch their business.  The association’s members have a track record of several successful investments, such as Doctena, Job Today, Governance.io, SponsorMyEvent or eRevalue.

Equity crowdfunding

Equity crowdfunding can also be an option for many young businesses. Such online platforms bring entrepreneurs and unsophisticated investors together with tickets starting in €50 or even less. Different shareholding and operating models are used by each platform (eg. some require a leading business angel to “sponsor” the deal).

As of today, Luxembourg entrepreneurs need to look across the border for equity crowdfunding solutions. MyMicroInvest in Belgium, Wiseed in France or Companisto in Germany may be the first references in a market which remains very regional.

Venture Capital

Luxembourg-based investors looking for deals in VC stages are scarce but have experienced a considerable expansion of late.

Mangrove Capital Partners is probably the best known due to its role in the early ages of Skype and other successful businesses. Other local investors such as BIP and Luxempart also played an important role in the industry, but their profile is linked to growth stage opportunities rather than funding early gems. Another investor which is open for venture business – although assumingly not being an early stage investor, is New Angel Capital. The team is particularly tailored to support fast growing companies to expand into the US market but require a track record more in accordance with growth stage.

In 2015, Expon Capital set up an office in Luxembourg and promised to become a leading VC investor with a particular focus on local start-ups (see interview below). Their experienced entrepreneurial team has already won the management of the Luxembourg Digital Fund (see interview with Jérôme Wittamer below) and continues to fundraise on its own behalf.

Funds for local VC activity will also emerge from the Luxembourg Future Fund, a fund of funds managed by the European Investment Fund with the mission to fund VCs’ investments into companies willing to set up and grow in Luxembourg.

Other investors located outside Luxembourg also keep an eye on the country’s activity. Indufin is a partnership between Luxempart and the Belgium family group De Eik, committing investments from €3m and having Benelux as its main target area. Another player in the region is Sofindev. Founded by Sofina in 1991, Sofindev currently runs a €100M fund targeting growth stage companies valued at over €15m.



Keeping an eye on local start-ups

It must be admitted that, as the Luxembourg start-up ecosystem is still very young, it does not yet have any “unicorns”here. However, this should not prevent all the key players from giving the Luxembourg start-up community the visibility and recognition it deserves and requires to continue to evolve and thrive.

How can worldwide attention be brought to all of Luxembourg’s digital start-ups that have the potential to conquer global markets? The country does indeed have many talented and experienced entrepreneurs, of many different nationalities, who innovate, launch successful products and services, and expand their businesses into new markets, all from right here in Luxembourg.

Luxembourg is a country full of innovation in which both public and private stakeholders have clearly felt the need to imagine — and implement — the economy of tomorrow. The development of a favourable ecosystem for the creation, formation, acceleration and expansion of innovative start-ups has become a priority of the government, and is also of great importance to all of Luxembourg’s residents and frequent visitors.

Some Luxembourg start-ups have succeeded abroad. Some have expanded across Europe, and others have thrived as far away as the U.S. These cross-border start-ups help attract the attention of foreign entrepreneurs and bring entrepreneurial talent and investment to Luxembourg.

Moreover, the Digital Lëtzebuerg initiative aims to enhance the country’s reputation, increase the promotion of the country’s hot start-ups, digital attractiveness, and successful entrepreneurs.

We are (all) in the same boat!



Our desire from the beginning is to make each of the selected start-ups more attractive so that they can raise money and get customers. Our aim for the program is for each start-up to walk away with a Minimum Viable Product in line with market needs. (Antoine Hron, Luxinnovation)





Business Angel Profiles


Larissa Best

Larissa invests in multiple sectors including Legal and Regulatory and Professional Services, with a preference for businesses with a social purpose. Her strategy focuses on finding entrepreneurs with sector knowledge, preferably having worked in the sector for 5-10 years and a management team of at least 2 co-founders.

Hedda Pahlson-Moller

Hedda has an overarching investment strategy of: value creation, diversity/social inclusion and sustainability (triple bottom line: People, Planet, Profit). Over 15 years of investing primarily in technology and professional services through debt/equity, the refined focus is on projects that provide measurable social/environmental impact alongside financial returns.

Pegman Haghshenas

Pegman is a long-term and “value-added” investor. He is a risk tolerant person looking at opportunities in different asset classes jurisdictions with a focus in Europe and the Middle East. Pegman values the founder(s)/ team, business and revenue models and short to medium-term scalability.


10 start-ups to watch in Luxembourg


      • Footbot

Smart device designed to help people take control the indoor air quality.

footbot.io

      • Doctena

European medical booking platform and mobile application helping patients find a doctor in Luxembourg, Belgium, the Netherlands, Switzerland and soon further afield.

doctena.com

      • FinQuest

Online platform where investors, advisers, and CEOs get connected to improve deal sourcing and networking with a strong focus on the Asia Pacific region.

finquest.com

      • Gloneta

Free way to send money to people internationally. People can chat with friends and family – and can now send money in the messages too.

gloneta.com

      • Governance.io

Software solution for investment fund professionals who need to oversee and manage complex investment fund structures.

governance.io

      • Job Today

Mobile app for job vacancies in shops, restaurants and more. It only takes a minute to apply and candidates always hear back within 24 hours.

jobtoday.com

      • Kliber

Mobile-first service connecting job seekers with recruiters via video. It helps people spot their next career move and record 20-second answers to four questions.

kliberapp.com

      • Koosmik

Secure online payment platform where people can send or request funds from friends in real-time. The community-driven app offers an all-in-one payment solution.

koosmik.com

 

      • Mu-design

Mixes great design with technology to create smart, innovative and emotional products. Their “Ulo” cute surveillance camera seduced 8,300 backers for over $1.6m of funding on Kickstarter.

mu-design/store.ulo

      • wondermags

First Self-Publishing Platform on which people create and publish their own eMagazines, get readers and make money.

wondermags.com

Highlighted Startups

Doctena

Patrick Kersten founded Doctena, a medical booking application used to make appointments with doctors. In the spacw of just three years, the Luxembourg entrepreneur has launched the application in four countries – Luxembourg, Belgium, the Netherlands, Switzerland – with a fifth market to be announced by the end of the year. The start-up has become a European leader and spearhead of the Luxembourg start-up ecosystem. Having raised close to €6m in various rounds (seed money has been exclusively provided by private investors and business angels, for now) and acquired DocBook, Doctena’s growth seems unstoppable.

According to Patrick “talks with VCs start once the size of the markets covered, and their potential, are big enough for regional (Benelux) based VCs. As markets expand, the project becomes more interesting for top tier VCs.” It took two to six months to Patrick to succeed in each round and convince investors to support Doctena in building the platform and expanding sales force. What VCs are looking for? “Teams that can offer a high multiple at the exit.”

Job Today

Eugene Mizin and Polina Montano founded Job Today, an easy-to-use app that connects employers and jobseekers in seconds, 24/7. The mobile marketplace has already raised €8.75m Series A, an investment led by Accel, with participation from Felix Capital and existing investor Mangrove Capital Partners. The company launched in 2015 in Spain, then in London and Paris and soon in other countries. “The initial traction, round of funding and new market launches are an important step towards expanding the business further and fulfilling our goal”, explains Polina.

Backed by the world’s leading venture capital firms, the founders have made their ambitions clear: “Job Today was born both mobile and global. We want to help millions of people around the globe to find a job from the comfort of their mobile phone. We are now aiming to become the number one global hiring app for hospitality and retail”.

Digital Lëtzebuerg: Launch of the Digital Tech Fund

Digital-tech-fund-launch

©MECO

 

After a pre-announcement in December 2015, the new Digital Tech Fund was announced on April 12th with 20 million Euros of public and private funds.

The new fund targets local startups with less than 7 years and featuring innovative products or validated prototypes. The fund will be managed by Expon Capital, a recently established VC player backed by investors and entrepreneurs with 20 years of experience in the digital space and notably in the fields of flash memory, mobile data, ecommerce, digital media, online video, big data, telecommunications, among others. Startups will be able to raise a maximum of €1,6 million from the fund which targets cybersecurity, fintech, big data, digital health, media, next generation communication networks, digital learning, internet of things. telecommunication and satellite-related services.

The funding of this public-private partnership comes from the Ministry of the Economy (€5M), the SNCI (€3M) – both public entities; the private players Post Capital (€3M), Proximus (€1.5M), Université du Luxembourg (€1M), together with Arendt & Medernach, Bil, Expon Capital, High Capital (BHS Services) and SES, the five committing 6.5M with individual contributions of at least €1M.

This new resource to Luxembourg startups will be operational from May 2016 and is expected to complement the existing funding offer available to startups such as the Fit4Start or the Luxembourg Future Fund. It is expected to attract and foster innovation and talents to Luxembourg of which the already established players may also bennefit in the future.

The launch of the Digital Tech Fund follows the creation of the Luxembourg Future Fund in April 2015 with €150M. In opposition to the Digital Tech Fund, the Luxembourg Future Fund is a fund of funds and targets businesses which are not yet established in Luxembourg. Its goal is therefore to attract new businesses and talents to Luxembourg rather than supporting local startups from scratch. Less than one year from its announcement, this EIF managed fund has already made its first €20M investment in Paladin European Cyber Fund. This new fund is part of the Washington-based Paladin Capital Group and will focus exclusively in cybersecurity and is expected to bring along other co-investors interested in the sector.