Buyout Fund EQT Starts $632 Million Venture Arm Targeting Europe

  • Managing Partner von Koch sees fund challenging U.S. dominance
  • Relying on U.S. has been ‘dangerous’ for Europe startups: EQT

The largest buyout fund in the Nordic region just got bigger.

EQT Partners AB has raised 566 million euros ($632 million) to invest in Europe’s most promising technology companies, Managing Partner Thomas von Koch said at the firm’s Stockholm headquarters. The step means EQT can expand from its current focus on infrastructure and credit holdings and target an area von Koch says is underfunded. The new money is on top of about $29 billion in capital that EQT has raised since being founded in 1994.

Thomas von Koch
Thomas von Koch
Photographer: Ruth Corke/EQT

Europe’s technology ecosystem has produced a lot of global names, including Spotify, Delivery Hero and BlaBlaCar. While such companies can often find funding early on to get an idea off the ground, they tend to run out of options when they start growing. So far, that’s forced European startups to turn to the deep pockets of U.S.-based venture funds. EQT wants to change that.

“Europe today has venture capital funds, but they’re tiny," said von Koch. "When it comes to B and C rounds, it’s for San Francisco to back. It’s dangerous for Europe and for the companies. EQT can take a company from $0 to $40 billion within our portfolio. We want to create a powerhouse in venture in Europe."

EQT has pulled together several stars from the tech community to build and run its new fund. Kees Koolen, the founder of Bookings.com, the online travel service site bought by Priceline Group in 2005, is the "mother of scaling," von Koch said. Koolen has advised Uber Technologies Inc. on its international expansion since 2012. Hjalmar Windbladh, who sold his IT company Sendit to Microsoft Corp in 1999 and co-founded carrier Rebtel Networks AB, is a "disrupter and mobile visionary," von Koch says. Lars Jornow, who helped drive game development and growth strategy at King.com, is described by the EQT managing partner as the master of tracking downloads.

While EQT Ventures will compete with Skype founder Niklas Zennstrom’s Atomico fund and smaller equivalents such as Sweden’s Creandum AB and Northzone Ventures, there’s more than enough demand for such funding to go around, according to von Koch.

"There is definitely a big need for investors post series A, and we have some very exciting companies in Europe with great potential but are forced to seek capital outside the region," Alan Mamedi, founder of Swedish mobile caller-ID app Truecaller, said in an e-mail. "We partnered with Sequoia for our B round, and KPCB and Atomico for our C round. Apart from Atomico there weren’t many options in Europe, so having a more local player would really benefit the whole ecosystem.”

EQT Ventures has already started looking for the next batch of European unicorns, defined as startups whose valuations top $1 billion. It led the 55 million-krona ($6.6 million) round raised by Swedish e-health provider Min Doktor, which connects patients with doctors online, and Wolt, the Finnish food-delivery service that raised $11 million last month. EQT is happy to invest along with U.S. funds looking to expand their companies in Europe, von Koch said.

Seeking out the best startups is key to ensuring EQT’s other investments continue to do well, according to von Koch. He wants the companies he buys constantly to ensure they’re making the best use of technology to improve their products and reduce costs. That can be everything from industrial machines using sensors for maintenance, to digitizing school text books and helping clothing companies improve their online presence.

EQT has even developed software called Motherbrain to seek out so-called trending companies to help it track down the next hit. The program can also be used by its other funds to stay at the forefront of their industries, he said.

Failure to take advantage of these new technologies means companies will "suffocate from the dust out there," von Koch said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE