When the PE markets start to show signs of countercyclical activity, you might think VCs would be tempted to play it safe.
Of course, that's assuming your venture outfit wasn't stacking up returns by the barrel load to start with.
Founded in 2016 by Sara Wimmercranz and Susanne Najafi, the all women-led VC BackingMinds claims it's bagging a 4x return on its 15+ startup portfolio. Since launching, the founders have been joined by Sara Resvik (an ex-Industrifonden investor) as CEO, and by ex-Tame co-founder Jasenko Hadzic as principal.
Niklas Thornestad (partner, and formerly of Klarna,) Mattias Lundkvist (investment manager and former CFO of BackingMinds first portfolio company, TransferGalaxy) and Elsa Hyland (investment analytics and renowned angel investor) round off the enlarged investment team.
Track record established, the BackingMinds team is already investing from its second vintage, a €50 million raise it says was all subscribed for in a matter of weeks.
With the new fund, it's taking on deal making across the Nordics and with longer-term ambitions to expand further afield within Europe.
Operating out of its Stockholm HQ, BackingMinds' equity holdings include the high-end pet wear-and-care brand, Denjo Dogs, and Brainstimulation, a neurotreatment and precision diagnostics in AR startup, as well as construction tech business Combify; and logistics emissions tracking and optimisation startup Skrym.
BackingMinds prides itself on spotting startup potential that traditional VC misses, often because investors are "following the herd", and conventional industry logic.
It has a steady pace, with 2 to 5 deals typically signed off each year, and a shareholding horizon of 5 to 10 years.
While the initial fund vintage can technically invest anywhere in Europe, it has so far largely concentrated on Sweden, where 14 of its portfolio companies are based (the other startup is in Finland.) The second fund attracted €50 million and there's been a single IPO from the fund, with a dozen or so shareholdings still in private hands.
"The talent mass in the Nordic ecosystem has never been stronger," Sara Reskiv, BackingMinds' CEO and partner, tells Tech.eu, "Each individual community is seeing a specialisation shaping up, typically created by a large exit in the region."
Tackling the provinces
As established Nordic VC giants the likes of Creandum and EQT Ventures have carved out global reputations, BackingMinds is jumping on a new wave of regional investment, tracking the inspiration highway out into regional Denmark, Sweden, Finland and Norway.
Nordic markets have long been viewed as an emerging leader in European VC terms. A 2018 data bulletin backed by all four Nordic VC trade bodies says €3 billion was raised by regional funds from 2012 to 2017, with €2.7 billion in VC funds flowing to startups.
Data sources show the region is hampered by an inability to funnel capital into markets beyond its capital cities; into provincial towns where the Nordic innovation boom is increasingly admired.
In 2021, for example, it says 87% of venture funds in Denmark went to startups in the Danish capital, Copenhagen. For Stockholm, the comparable figure was 75% (Sources: The Danish Growth Fund & Tillväxtverket.)
Part of this trend might be down to the region's landmass. The Nordics punches well above its weight in per capita terms, but the geographical area (6 million+ square kilometres) is around 10 times of that of France and 17 times that of Germany.
The total population (2019) of 27.4 million is fewer than either of the above European nations, and unmanned nature still accounts for around half of its landscape.
BackingMinds believes that its credentials backing non-conventional founders will be attractive as its thesis rolls out regionally. To date, it says 95% of its founders have been either women, immigrants to the Nordics or managers of non-Stockholm/Helsinki-located businesses.
There's a strong founders' connection, with all of the second fund's LP contributions sourced from non-institutional investors, including the family office for the founders of clothing chain H&M, and the visionaries behind Nordic unicorns like Spotify and Supercell.
"In Finland we all know the thriving gaming scene created by Supercell/ Rovio, in Sweden there's a strong B2C DNA, from companies such as Spotify, Klarna, King and Truecaller," said Reskiv.
"Examples in Denmark can be made in cities outside of Copenhagen - the cities of Aarhus and Odense, where respectively a Fintech cluster is shaping up (in Aarhus).
"Secondly, despite the boom of new VCs in each local scene and entry of European/US-based funds, there's still a huge problem in the blind spots of venture capital, which we see as a major opportunity to invest in fantastic female founders, minorities and startups outside of the capital cities."
- This story was amended to remove an inaccuracy that stated BackingMinds was announcing its second fundraise, when in fact this is the news the second fund will expand across the Nordics.