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June 22, 2006
Samwers' European Founders Fund: Interview
As regular readers know, from time to time the alarm:clock euro profiles early stage ventures. But we also want to cover those who work with and advise seed stage firms, and today it is the European Founders Fund getting the treatment.
We spoke to Oliver Samwer (m) who along with his brothers, Marc (l) and Alexander (r), are the "founders" named in the fund. This was the first interview the recently minted venture investment team has ever given.
In case some readers are not familiar with recent European venture history, the Samwers are so-called serial entrepreneurs. They founded online auctioneer Alando in 1999, which six months later was acquired by eBay for $50M during the bubble.
Subsequently, they established the mobilephone ringtone and content company, Jamba, which was acquired by Versign for $273M.
In business as investors for about nine months now, the European Founders Fund has enetered the equity of 7 startups, 4 in Europe, and 3 in North America, and is looking to add 5 or 6 more in the coming year.
Current portfolio firms include Hitflip.de, a Peerflix clone, e-Sport.de, a developer of browser-based games, and Myphotobook.de, a Berlin-based publisher of books based on digital photo albums.
In many ways, the setup and approach is similar to the Scandinavian early stage investor Lund/Kenner, which we profiled in April (See link below).
Both offer capital for early stage ventures, but what makes them different is the level of advice and industry contacts provided by the prinicpals.
Typically, venture capital firms tend to operate more or less at a strategic level, often interacting only during board meetings.
With this team, it's daily contact, and its operational rather than strategic advice, according to Samwer.
It does not insist on a board seat when investing. "We're not the board meeting types, and prefer to work at the operational level with founders," said Samwer.
For these reasons, the team handles 3 or 4 active investments at any given time. "We can help wireless and Internet startups, particularly those with a consumer focus but also B2B, to be more successful. We do that by building the business model with them, showing how to convert customers using free services to premium services, how to grow in the European online market, search optimization, help to meet the right people to make deals with portals, and matchmaking with partners both online and offline," said Samwer.
This business development advice is key. The three venture-backed US firms that have accepted an investment from the European Founders Fund did so because they felt it would help them to enter the European market, said Samwer.
It seems to be a formula that helps them close. "Every investment opportunity we have approached, we got into, and our offer was accepted," he added.
Because of that hands-on approach, the most important aspect in making investment decisions for Samwer is the management team of the startup. "If the chemistry is right, we will invest," said Samwer.
Chemistry, or an affinity between the founders and the investors, is important because the Samwers work closely with their investees during the early phase of investment. "We are in daily contact with founders. They come to us with ideas and problems. We help them address the issues," said Samwer.
The value of their experience is noted by venture capital investors as some are starting to bring in the European Founders Fund in order to help develop portfolio companies.
For example, about six months after Index Ventures invested in Oanda, the Delaware-registered company behind fxtrade.com which is managed by teams in Zurich and Toronto, Samwer's fund was invited to participate in the investment.
"We are helping Oanda with the development of the European market for its foreign exchange trading services," he said.
Established nine months ago, the European Founders Fund is called a fund, but its activity is more like a business angel. It is a partner for entrepreneurs looking to develop their business model and develop online and wireless services.
The Samwer's are investing their own money, rather than capital raised from a set of limited partners as VCs do, and they only invest where there is a potential to help at an operational level with entrepreneurs.
Since the firm does not have a website and has no plans to put one up here's a summary.
Quick Facts About European Founders Fund
- Deal Size = 500K to 2M
-Offer=advice and contacts on expanding and developing new markets for
online services.
-Sector Allocation= Software: consumer-oriented wireless and Internet
businesses, including exchanges, networks, and online services. Also open to
B2B.
-Geographic= North America and Europe
-Market opportunity= greater than €100M
-Stake size=Open to minority investments
-Board seats=Not necessary
-Liquidation preference=Yes
-Portfolio Companies: Oanda (fxtrade.com), Myphotobook.de, e-sport.com, Hitflip.de plus 3 other undisclosed ventures.
-Contact: oliversamwer @ yahoo.de
Read: Lund Kenner Stakes Out The Early Stage (alarm:clock euro)
Posted on June 22, 2006 03:29 PM | Posted to Early stage | Venture Capital | Permalink
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