Sat, 30 November 2019
Investing in the Future
How three women from Iceland launched Crowberry Capital, a Nordic venture capital fund seeking to support the next generation of creative entrepreneurs.
To be boldly creative, you often have to strike out on your own adventure. So that’s exactly what Hekla Arnardottir, Helga Valfells, and Jenny Ruth Hrafnsdottir did.
While working together at an investment capital fund, the three women noticed a pressing need for more early-stage funding in their region. The trio wondered if they could not only meet that need, but also create something exciting and visionary by launching a private fund of their own.
In 2017, they took the leap, and set out to launch Crowberry Capital, a Nordic venture capital fund with its sights set on supporting creative technological advancements in spaces ranging from gaming to health.
No matter the field, their goal was to help young and promising Nordic companies (in Iceland and Sweden) grow into global brands. And just two years later, they already have 10 startups under their wing.
There were, of course, many steps in between the launch and the fund’s present day success. For one, before a fund can start scouting new talent to back, it needs a whole lot of cash to invest in the first place.
As you might imagine, launching a venture capital fund isn’t cheap. But you might be surprised to learn that venture capitalists don’t necessarily need to have their own personal wealth to get started (although it certainly helps). VC firms offer financial and other forms of support to early stage companies with high potential for growth, often deploying assets from other sources—wealthy individuals, banks, other investment funds, etc.
Although Arnardottir, Valfells, and Hrafnsdottir knew many of the institutional investors in Iceland and had impeccable reputations, they still found themselves cold calling smaller investors. They even spread word through the media that they were launching the fund.
“We went out early in the process to the local media and said we were going raise this fund,” Hrafnsdottir says. “So we sort of got it out in the open. Of course, that increases the risk that if you fail, you fail publicly, but we took that risk.”
Although they acknowledged the risk, for them, failure was never an option.
“That’s why it’s great to be three,” Valfells says. “There was always at least one optimist.”
That process of raising capital also gave the team a fresh perspective on life as an entrepreneur.
“It made us more empathetic toward entrepreneurs, because you realize you just have to cold call rich people you’ve never met and say, ‘Would you like to invest in my fund?’” Valfells recounts with a laugh.
Being on the “selling side,” as she puts it, helped them to recognize more clearly what it takes to pitch effectively and reemphasized the importance of passionate energy, lessons they carried forward into choosing where to invest once the fund was up and running.
But despite the daily strain of cold calling for investments, Valfells says that living in Iceland took away much of the stress others might experience in their position.
“There’s a great safety net,” Valfells says. “Everybody has access to childcare and school and healthcare, so I think you’re willing to take a risk with your professional life because you know there’s a safety net that catches you.”
She says that this safety net makes walking away from stability much easier and, because of that, creativity is free to flourish. And by extension, people are more liberated to do what they love.
“I think we’ve all made sacrifices in the sense that we’ve turned down higher paying jobs and jobs with more security, but it hasn’t been a sacrifice because this is what we love doing,” Valfells says.
After six months of phone calls and meetings, they had raised $40 million, and Crowberry Capital was ready to take flight.
Comfort in the Chaos
When the time came for the trio to begin investing in up-and-coming companies, they weren’t just focused on the products coming across their desks. Instead, they took the time to learn as much, if not more, about the minds behind the products.
“Everybody wishes to invest in bold, creative, and hardworking entrepreneurs,” Valfells says, “but I think that one part of the process with us is we get to know the entrepreneurs really well and really see the ones that can kind of do things to move the needle.”
By taking everything into account, from the passion behind the pitch to the willingness of the entrepreneurs to leave jobs behind and throw themselves entirely into their projects, the three founders of Crowberry Capital single out investments with staying power.
“It’s about finding the comfort in the chaos,” Hrafnsdottir says. “I think the ones that really go with the flow and are determined with their mission manage to prosper at this early stage.”
They also consider how the entrepreneurs plan to enter the market, draw attention to their product, and brand themselves. Essentially, they have an eye on the creative spirit that exists within a team.
“It’s becoming more important than anything, because in this age of artificial intelligence it’s really important that we as people build up our and social intelligence,” Hrafnsdottir says. “These are the things AI is never going to bring to the table.”
Arnardottir also says that they pay particular attention to what kind of team the entrepreneurs surround themselves with, citing gaming companies as being particularly talented at building stellar teams. Do they communicate well? Do they represent a diversity of skillsets? These are the questions the trio talks over before choosing to invest.
Valfells even noted that she’s seen particular success when it comes to going global when a team is international from day one.
“Having a diverse, international background helps build an international company,” she says.
But, while they try to find teams and companies that can thrive and grow internationally, they aren’t just on the hunt for the next unicorn.
“I think there’s a risk in the world today that unicorns overshadow a lot of good businesses that can give investors great returns,” Valfells says.
She explains that, while unicorns are great, they also keep their eyes peeled for racehorses: companies that won’t make a massive splash but will never fail as they faithfully speed forward into the future.
And the future is where all three women have fixed their sights.
Planning for a Digital Future
In an increasingly digital world, Crowberry Capital has chosen to focus on businesses that are focused on building a better future within that reality.
“We invest in technology that we believe is changing the world for the better,” Valfells says, “and that makes you feel really happy and good about your job.”
For example, Travelade provides online travel guides curated from the recommendations of locals, and Aldin is an immersive VR company. They’ve also welcomed Monerium, an e-currency supported by blockchain technology, and Kind, a virtual communication tool for the healthcare industry, into the fold.
They are also very mindful to choose companies they will want to work with for years, because Crowberry doesn’t just offer seed money to startups. They also plan to support businesses through B and even C round funding, with up to $6 million set aside for each company as it grows over the 10-year lifespan of the fund.
So, Arnardottir explains, if one of the three founders is more passionate about a company than the others, she takes point on guiding that business while the others serve more of a support role.
But no matter how passionate they are about a business, they are very careful to let the entrepreneurs make the big decisions.
“I think it’s very important that we are hands on and not hands in,” Valfells says. “For us, it’s very important that we’re backing teams that are really good at execution and are in the operations, and we’re more like sounding boards and mentors.”
So, as the trio behind Crowberry Capital presses forward into the future, searching for the final five investments they plan to make, they are excited to lead another generation of Nordic entrepreneurs onto the international stage as creative innovators who will change the world.
Interview by Nathan Chan, feature article reprinted from Foundr Magazine, by Erica Comitalo