Give us a brief introduction, what do you do at DN Capital and how it is that you define yourself?
I’m the father of two daughters and godfather to multiple European growth companies. For DN I look for very interesting startups with a lot of growth potential.
Tell us more about DN and your new fund
DN has been doing the same thing since we started 13 years ago and that is supporting the world’s best talent to build industry leading technology companies in growing markets. The focus is Europe but the link to the US is very important for our companies and that is why one of the two managing partners moved there after we raised our last fund, we’ve also had most of our successful exits to US acquirers. Out of our third fund we’ll be doing more of the same! The focus remains Europe but more so companies that are looking to build something global rather than focus only on the local market.
The biggest exit we had was selling Endeca to Oracle, which was a very successful outcome for us. We have also sold stakes in Datanomic, Apsmart and Kana since then. That being said, I’d say the company we are most known for is Shazam even though we haven’t sold it. The consumer companies in our portfolio are always better known. You can see our portfolio here.
What is it that interests you about the Spanish market?
I’m rarely interested in something that’s just a copy of what has been done elsewhere. A truly valuable business needs original thinking, amazing execution and you need to pick the right markets. If I look at Spain, to some extent startups have got the positive out of the turmoil in the recent years. The top quality talent that used to go directly from leading universities straight into jobs within the big corporates is starting to realize that their job isn’t as steady and secure as they had once thought. We are starting to see a lot of that talent move into new businesses and this is where I’m most excited. At the same time, there are some markets where everyone is busy cloning what is happening elsewhere, but I see a lot of genuinely original ideas coming out of Spain that I haven’t seen elsewhere. That’s always refreshing, to see companies differentiating themselves by offering something truly different.
What is your investment strategy? Sectors you are looking at, stage of startups?
We are active across the technology sector: enterprise software, B2B, I specifically like marketplaces, consumer, everything around mobile and I think that’s the same whichever geography we are studying. In Spain, what I’m more interested in is a team with genuinely different and unique ideas and a global vision. Alternatively, a company that has proven their model in the local market and wants to take the next step, moving from being a local player to a global brand.
Specifically, DN can invest anything from €250K into a seed stage business up to €10MM of equity in later stage businesses with proven metrics but we are flexible on whether it is primary or secondary and minority or majority stakes. What is important to me is that we’ve got the right structure for the business to succeed and alignment on what we’re trying to achieve.
Ultimately, I’m looking to back businesses that can execute and build something great over the next 5-10 years. It’s easier these days for a startup to get to the point where they can prove the basic metrics whether that’s user engagement, growth in revenues, making the sales economics work online or through a direct sales force. It’s important for me that teams can show they are monitoring and optimizing these core metrics and once that is in place I’m more than happy to help them repeat that growth loop a million times over.
I see a lot of potential in businesses here so it is definitely a region where we will be getting more involved.
There have been more tech IPOs this year (2013) than in any year of the early 2000s and the amount of capital flowing into the industry is huge. What do you think about the claims that we’re in the middle of dotcom boom 2.0 and that consequently there will be another crash?
We were having this same conversation in the office on Friday and the fact that this conversation is being had means that there is some froth in the market. I think that certainly for an exit this is very relevant and getting to a successful IPO is a huge driver for any of our businesses however at the same time this isn’t global. Opportunities are also regional. There is the potential that some of this spills over however I’m not worried about it. There is lots of value to be built by supporting growth businesses.
What is your opinion on the negativity that surrounds the investment climate in Spain and how does it affect your decision-making?
This has been a growing topic and something on the agenda for years; how do we make Spain a better place to do business? I think every country around the world has an obligation to do that as there is global competition for high quality talent as there is for capital. I think in Spain that message is being heard. The government is starting to change things to make it easier to do business so for me that’s a positive.
As I think about it, what is the right time to get involved in a country? As the investment community is pessimistic about Spain, there is a great opportunity for us to work with the local entrepreneurs and build leading businesses before everyone else gets wind of it. We have the opportunity to build something very interesting!
What blogs, websites do you follow/read/visit most often?
Barcinno of course!
If you are interested in submitting your startup to be evaluated by the DN team then you can do so here.