Ever wonder how investment companies approach the market? Our board member and NWC general partner, Ben Fu, shared some great insight. While they’ve only been around since 2009, they have a pretty good recipe for success that involves focusing on the expansion stage, having deep and thematic knowledge about specific sectors and having a European expansion platform to help their U.S.-based companies.
As a side note, lemon really helps kick up the flavor of a Hoegaarden — you should give it a try while watching episode #2 with Ben below.
Stefan: So you, Next World Capital, it’s a pretty young firm, right? Not well known, maybe not around for 20-30 years, but you guys had phenomenal success in getting some of the hardest data companies. What do you attribute that to?
Ben: First of all, thank you for saying that. I think very highly of Datameer …
Stefan: Thank you.
Ben: As one of them.
Stefan: Cheers on that.
Stefan: Oh, that’s good. Squeeze a little lemon, yeah?
Ben: Yeah, let’s do it.
To your question of us being a younger firm, yes we got started actually in 2009. The firm is actually pulling together what we think is the rising stars from various different firms. All the general partners of this firm came from established expansion stage enterprise-focused firms all with a billion to five billion in AUM. Kind of came together with a shared vision of being able to be the next generation VC firm. What that really included is being focused on the expansion stage. What it also included was being deep and thematic in the sectors we know.
We think of it as top knowledge, will get us top results. So that thematic approach is deep investment and expertise in areas such as big data, software-as-a-service, storage, infrastructure management and others. Lastly, our key added value, which I think we’re trying to help Datameer with, and is particularly helpful with your background is our European expansion platform. We’re unique in that we’re the only VC firm that provides a distinct, European expansion platform to help our US-based companies expand there. So I’d say the combination of the focus on the expansion stage, thematic approach, and then also our European expansion platform has been a key differentiator and highly complementary to existing investors, but most importantly to seeing how CEOs see us. Can we a value added board member? Can we be somebody who knows your space as deeply as possible, and quite frankly I want to make sure that in every company that we invest in are we, if not the most value-added board member, pretty close.
Stefan: Yeah. Can we talk a little bit more about that European expansion platform? That was super helpful for us and I think that was definitely one reason we are very much drawn into partnering with you guys. If you do an enterprise software startup, and I happened to grow up Europe, obviously. But it’s so hard to take it from the zero to one, or maybe three million, and then actually take it ten or a hundred and really build a truly global company. I think you guys are doing some really cool stuff there. Can you just talk about a little bit and explain how you take companies from here to over there.
Ben: Absolutely. Maybe just to kind of level set of our view on the market. Europe is very, very important. You can see it even with the public companies out there. Salesforce is going to invest a billion dollars just to be able to expand into Germany and France. A billion dollars. They need it on the data center side, they also need it on the fleshing out of service-enablement, sales, etc. Europe is highly strategic. If you look at it just on the high level to level set of the global 2000 companies out there, it’s 25%. Of global IT spent, it’s 29%. So you’re talking about lots of dollars. Where the US and Europe are up here, but after that it kind of drops off the cliff. In Asia, it’s very great for consumer adoption but in terms of enterprise buying it’s pretty low.
So that’s just a level set of how we view the market. What we’ve actually built over a very short time is our European expansion platform where we primarily invest in US-based companies, but we want to be able to make them as successful as possible getting into Europe. What does that really mean? We open a five-point institutionalized program to help companies such as Datameer with strategy. Really understanding which markets to go after, which countries to go after when we go to market itself. What’s the right product market fit? Do you go through a direct, indirect sales channel? How important are those things? When you’re actually going to market we like to get our hands dirty and really be able to help out. We help in things such as partnership introductions, really being able to help you with figuring out who are the large integration guys, the system integrators of the world – the Accentures, the Capgenminis – to be able to get introductions there. But also local folks, to give you credibility and access.
Hiring and vetting folks, that’s super important when you think about your leader that’s out there, that’s the person that’s going to hire the rest of your team. How can we help hire and vet those folks? And lastly it’s really around direct customer introductions. We are actually unique in that we have a network of 75 C and VP level executives in what we call our European Advisor Network. We can not only help to direct introductions, because these are IT buyers out there, but these are the folks that actually help with coaching and guiding our companies, really being able to navigate the countries as needed.
Maybe a little bit more than you were expecting, but it really is proving that we’ve built out over the years. I’m super excited on continuing to build that out because it is a key differentiator for us.
Stefan: As a company if you’re raising money, if you just go out for the highest valuation and not looking for value add, I think you’re doing something wrong. Because you want to make that money work for you, if that makes sense. We’ve seen success with that platform.